Chinese Manufacturing Surpass Expectations, But Economy Still Has a Long Road to Recovery

imageEconomic Indicators9 hours ago (Jun 30, 2020 01:01AM ET)

(C) Reuters.

By Gina Lee – China’s National Bureau of Statistics reported a better-than-expected manufacturing Purchasing Manager’s Index (PMI) of 50.9 on Tuesday.

A PMI reading above 50 indicates economic growth.

The figure was higher than the 50.4 number predicted in forecasts prepared by as well as the previous month’s PMI of 50.6. The Bureau also reported a non-manufacturing PMI of 54.4, which was higher than May’s 53.6 and a composite PMI of 54.2, above May’s 53.4.

The data indicated that manufacturing is still leading Chinese economic recovery from the COVID-19 virus, Zhou Hao, senior emerging markets economist at Commerzbank AG (OTC:CRZBY), told Bloomberg. But he added, “China’s GDP growth is very likely to turn positive in the second quarter. However, the job data remain a concern as both job indices are below 50, suggesting that the demand recovery still lags behind.”

Data from the China Logistics Information Center indicated almost 55% of firms were seeing inadequate demand, the fourth consecutive month of the same message from over half the firms surveyed. The Bureau also warned in its statement that a lack of orders was starting to contract the small firms’ positions, while medium-sized firms rose above 50 and larger companies improved further. More small firms reported a lack of orders compared to larger companies.

“China’s recovery is still on track, but the momentum could lose some steam in coming months… despite the strong recovery between March and mid-June, we believe a full economic recovery remains distant. In our view, it is too early for Beijing to reverse its easing stance,” Lu Ting, chief China economist at Nomura, told Bloomberg.

Meanwhile, Lu’s colleagues told Reuters, “We believe the economy is still far from a full recovery and Beijing cannot afford to reverse its easing stance.”

Chinese Manufacturing Surpass Expectations, But Economy Still Has a Long Road to Recovery

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