SHANGHAI: China’s manufacturing sector has capped its strongest quarter in almost six years, a private gauge suggests, even as growth eased slightly in June and the underlying economy remains fragile.
The RatingDog China manufacturing purchasing managers index slipped last month to 51.7 from 51.8 in May.
While short of the median forecast, it brought the average for the last three months to 51.9, the highest since the fourth quarter of 2020.
“The manufacturing sector maintained a steady expansion in June, supported by sustained new order growth, easing cost pressures and improved labour market conditions,” Yao Yu, founder of RatingDog, said in a statement.
New orders increased for 13 straight months, matching a record set in 2021 that was the best since 2018.
Input cost inflation slowed to a five-month low, easing pressure on factory margins.
But this strength may not be enough to offset fragility in the economy, which appears headed for a sharp slowdown in the second quarter.
Retail sales and investment both fell in May at rates unseen since the pandemic.
“Taken together with the best set of official PMIs this year, it is consistent with a pick-up in economic momentum,” Julian Evans-Pritchard, head of China economics at Capital Economics, said of the private gauge.
However, he warned the pick-up in momentum “has been heavily dependent on exports and artificial intelligence-related tech”.
This reliance is facing headwinds as trade partners mull new measures to counter growing trade imbalances.
The United States has hiked tariffs on Chinese goods that previously sank exports to the world’s largest consumer market.
While ties have stabilised following a cordial summit in May between US President Donald Trump and Chinese leader Xi Jinping, the levies remain elevated and continue to hurt the appeal of imports from the Asian power. — Bloomberg
