China’s manufacturing sector expanded for a seventh consecutive month in June, completing its strongest quarter since late 2020.
Rising production and continued growth in new orders supported the improvement, according to a private business survey released on Wednesday.
China Manufacturing PMI Remains in Expansion
The RatingDog China General Manufacturing Purchasing Managers’ Index, compiled by S&P Global, slipped slightly to 51.7 in June from 51.8 in May.
However, the reading remained above analysts’ forecast of 51.6. Any PMI figure above 50 indicates expansion, while a reading below 50 signals contraction.
The average PMI reading for the second quarter reached 51.9. That marked the strongest quarterly performance since the final three months of 2020.
New Orders Support Factory Growth
Yao Yu, founder of RatingDog, said China’s manufacturing sector maintained steady growth in June.
The expansion was supported by continued increases in new orders, lower cost pressures, and improving labor market conditions.
A separate official survey released on Tuesday also showed that China’s factory activity returned to growth in June. Strong demand for semiconductors, computers, and other artificial intelligence-related products helped drive the recovery.
Factory Output Expands for Seventh Month
Manufacturing output increased for the seventh month in a row. However, the pace of growth slowed to its weakest level in three months.
Employment also improved for the first time in three months. Job creation reached its strongest level since August 2023.
At the same time, unfinished work increased for a fifth consecutive month. The rise in backlogs suggests that factories continued to face growing workloads despite hiring more employees.
Domestic Orders Continue to Rise
Overall new orders expanded for the 13th straight month. This matched the longest period of continuous order growth recorded since 2018.
However, demand from overseas markets remained weaker.
New export orders declined for a second consecutive month. Export prices continued to increase, although the pace of growth slowed to its weakest level since March.
Manufacturing Cost Pressures Ease
Cost pressures across China’s manufacturing industry continued to moderate in June.
Input prices increased for the 12th month in a row, but the rise was the smallest since January. Meanwhile, manufacturers raised their selling prices for a sixth consecutive month.
Lower cost pressures may provide some relief to companies as they manage higher workloads and uneven demand.
China’s Economic Recovery Remains Uneven
China’s broader economy continued to show signs of imbalance.
Strong factory production and exports supported overall growth. However, household spending and domestic consumer demand remained relatively weak.
This gap suggests that China’s economic recovery is still heavily dependent on manufacturing and international trade.
Business Confidence Weakens
Manufacturers remained optimistic about production levels over the next 12 months.
However, confidence declined to its lowest point since January. Businesses remain concerned about weaker export demand, uncertain global conditions, and the uneven pace of China’s domestic recovery.
Despite these risks, the latest PMI figures show that China’s manufacturing sector ended the second quarter with its strongest performance in more than five years.
