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China's June factory output increased at the quickest rate in 13 months

Image: Reuters Berita 24 English - According to a private sector poll released on Friday, China's industrial activity increased in June ...

Image: Reuters

Berita 24 English - According to a private sector poll released on Friday, China's industrial activity increased in June at its quickest rate in 13 months, helped by a significant increase in output as manufacturers rushed to meet increasing demand after COVID lockdowns were lifted.

The Caixin/Markit manufacturing purchasing managers' index (PMI) rose to 51.7 in June, also indicating the first expansion in four months, from 48.1 in the previous month. Analysts had predicted an increase of 50.1, but that was far in excess of that.

On a monthly basis, the 50-point index threshold divides expansion from contraction.

In comparison to results from an official survey, the recovery revealed in the Caixin poll, which concentrated on smaller, more export-oriented businesses in coastal regions, was more convincing.

Since some COVID lockdowns were lifted as COVID-19 cases decreased, the economy has accelerated in June. A number of support measures announced by the State Council in late May to stabilise growth are now progressively taking effect.

A sub-index measuring output increased to its highest level since November 2020, while new orders experienced the fastest four-month growth after three months of fall, helped by the first uptick in export orders in about a year.

After deteriorating over the previous two years, supplier delivery times stabilised in June amid lessening supply chain bottlenecks.

Nevertheless, factories were cautious about adding personnel despite the robust recovery, and employment dropped for a third consecutive month.

According to Wang Zhe, senior economist at Caixin Insight Group, "Restoration in the Post-Pandemic Era Remained the Focus of the Current Economy, But Its Base Was Far From Strong."

"The demand rebound was slowed down by declining household income and expectations brought on by a fragile labour market. Supportive policies should thus be directed on affected low-income groups, gig workers, and employees."

China's economy has begun to recover from the supply shocks brought on by severe lockdowns, but challenges still exist, including a record-high unemployment rate in major cities, a still-sluggish real estate market, weak consumer spending, and concern regarding further infection waves.

Analysts anticipate that the economy will continue to recover in the third quarter, however it will be challenging to meet this year's official GDP target of roughly 5.5 percent unless the government abandons its zero-COVID policy.

On Tuesday, President Xi Jinping defended the zero-COVID policy, saying China is willing to suffer some short-term negative effects on economic growth over harm to the general populace's health.

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