China’s factories saw job growth fall in June: Reuters poll By Reuters
Written by Joe Cash
BEIJING (Reuters) – China’s manufacturing activity likely contracted for a second month in June, a Reuters poll showed on Thursday, keeping up with calls for fresh momentum after a series of recent indicators showed the economy struggling to get back on track.
The official purchasing managers’ index (PMI) was forecast at 49.5, unchanged from April, according to the median forecast of 19 economists polled. The 50-point mark separates growth from contraction at work.
The top forecast in the survey was 50.0 from DZ Bank, while the Industrial Bank of China returned a low reading of 49.1.
The PMI, a sentiment-based survey, has sometimes presented a worse picture of the economy than some of the hard data, but May’s disappointing industrial output and profit numbers suggest that industrial owners have every reason to worry.
China’s export forecasts are up for the month of May, suggesting that manufacturers are able to find buyers overseas, but experts say the jury is still out on whether exports will continue. Not least because of the growing trade tensions between Beijing on the one hand and Washington and Brussels on the other.
All the while, the long-running asset crisis continues to weigh heavily on domestic demand.
Retail sales last month beat forecasts, but were helped by five days of public holidays, while public sector investment grew just 0.1% in the January-May period, reflecting weak consumer and investor confidence.
Analysts expect China to release more policy support measures in the short term, and the government’s pledge to boost the economy appears to be helping to kick domestic consumption into high gear.
Policy support and strong exports should help the $18.6 trillion economy grow by 5.5% this year, said Julian Evans-Pritchard, head of China Economics at Capital Economics, although he cautioned that he was “not yet bullish on the medium-term outlook.” “
Officials are under pressure to fire up new engines of economic growth to reduce the economy’s reliance on goods, a target analysts say may not be consistent with keeping growth steady at around 5%, which is the target for this year.
Chinese Premier Li Qiang on Tuesday told attendees of the World Economic Forum in the northeastern city of Dalian that the rapid growth of new industries has greatly strengthened healthy economic development.
“Since the beginning of this year, China’s economy has been on the rise…and is expected to continue to improve slightly in the second quarter,” Li added.
The official PMI will be released on Sunday. The private sector Caixin factory survey will be released on July 1 and analysts expect the reading to fall to 51.2 from 51.7.
