In June, Caixin'S China Manufacturing PMI Recorded 51.3, Falling To A Three-Month Low

In June 2021, Caixin's PMI (Purchasing Manager's index) of China's manufacturing industry announced on July 1 dropped slightly to 51.3, lower than 0.7 percentage point in May, which was the low point in three months, indicating that the growth momentum of China's manufacturing industry weakened in June due to repeated epidemic situation and supply chain disruption.

This trend is consistent with the National Bureau of statistics manufacturing PMI. The PMI of manufacturing industry in June 2021 released by the National Bureau of statistics was 50.9, down 0.1 percentage point from the previous month.

In June, the growth of manufacturing supply and demand slowed down, and the production index was higher than the critical value of 50.0, but it has dropped to the lowest level since April 2020. The index of new orders was the lowest in three months, and the index of new export orders was only slightly higher than the dividing line between prosperity and drought. The enterprises interviewed said that the recent repeated outbreaks at home and abroad had a negative impact on both sides of supply and demand.

Consistent with the trend of new business, the data shows that the growth rate of purchasing activities in June also slowed down, with only a small expansion on the whole. Enterprises reflect that insufficient inventory of suppliers, coupled with the slow delivery of logistics, lead to supply chain problems.

In terms of employment, manufacturing enterprises continued to increase employment, and employment continued to expand for the third consecutive month, with the highest employment index in nearly seven months. Some enterprises said that new business continued to grow, and manufacturers planned to increase production capacity. At the same time, the backlog increased for the fourth consecutive month, but the backlog rate was still small.

In June, the purchasing inventory index rose to the expansion range for the first time since this year. In order to deliver orders, some enterprises increased the use of existing finished goods inventory, resulting in the expansion of the decline in finished product inventory of the manufacturing industry, and the finished product inventory index hit a new low since may 2016.

The rising price index slowed down slightly. In June, the average input cost growth of China's manufacturing industry slowed down, but it was still significant. The main reason lies in the rising prices of means of production such as metals and fuels, which aggravates the cost burden. Some manufacturers choose to increase the sales price, and the cost side pressure is transmitted to the demand side. The trend of ex factory price is consistent with the input price, but the increase is significantly slower than that in May.

The expected index of manufacturing output in June was the same as last month, the lowest in five months. However, compared with historical data, the overall optimism of the month was still high. In the future, with the epidemic prevention and control and the release of new products, domestic and foreign demand is expected to continue to recover.

Wang Zhe, a senior economist at Caixin think tank, said that although the epidemic at home and abroad has a negative impact on the economy, the overall manufacturing industry is still expanding steadily, the market supply and demand remain stable, the employment market continues to improve, and the momentum of economic recovery remains in the post epidemic Era. Inflation pressure has eased, but the purchase price and ex factory price of the manufacturing industry are still rising, and the shortage of local raw materials still exists. In the second half of the year, with the weakening of the low base effect, economic downturn and inflation pressure are still serious challenges.