China June official PMI slips to 50.1, adds to growth worries

The output sub-index contracted in June for the first time since October and factories shed jobs at the quickest pace since August

China's official purchasing managers' index (PMI) slipped to 50.1 in June from 50.8 in May, a survey showed on Monday, reinforcing worries about tepid growth in the second quarter.

 

The PMI reading, published by the National Bureau of Statistics, was slightly stronger than market expectations of 50.0 in a Reuters poll.

 

A reading above 50 indicates expanding activity while a reading below that level points to a contraction.

 

"The June PMI fall, across the board on major sub-indexes, indicates downward pressure in the economy," Zhang Liqun, an economist with the Development Research Centre, a top government think tank, said in a statement accompanying the release.

 

A sub-index measuring new orders fell to 50.4 in June from 51.8 in May, indicating weaker demand for Chinese goods.

 

The output sub-index dropped to 52.0 in June from May's 53.3 and the inventories level worsened to 47.4 from 47.6 in May.

 

Economists expect other data for June, to be released in the next two weeks, would confirm their worries of even slower growth in the world's No 2 economy this quarter from 7.7 % in the first quarter.

 

And a recent cash crunch will likely further dim the economic outlook in the second half, as banks are expected to slow the expansion of off-balance-book lending while the new leadership will probably refrain from stimulus.

 

A PMI survey sponsored by HSBC, which focuses more on small- and medium-sized firms in the private sector as compared with the official one, is scheduled to be published at 0145 GMT.

 

Its preliminary June reading, published on June 20, fell to 48.3, slipping under the 50-point level for the second time since October as new orders shrank.