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The pulse of China’s industrial heartland weakened again, with industrial activity falling for the second consecutive month in June.
The official purchasing managers index (PMI), released by the National Bureau of Statistics on Sunday, came in at 49.5 in June.
It’s the same number as in May, but below the 50-point mark that separates growth from contraction.
In other words, it shows that activity has slowed down again.
New orders, raw material stocks, jobs, supplier delivery times and new export orders, all contracted.
Production was one of the few sub-indexes that showed growth.
The non-manufacturing PMI, which includes services and construction, fell from 51.1 in May to 50.5, the lowest level since December.
The services PMI showed very marginal growth, but at 50.2, it is the slowest growth in five months.
The construction PMI fell to 52.3, the weakest reading since July last year.
“Real manufacturing activity is likely to be stronger than the data suggests, as our observation is that the official PMI fails to fully capture the current export momentum, which has been the main economic driver this year,” Xu Tianchen, senior economist at the Economist Intelligence Unit, told Reuters.
Hao Zhou, chief economist at Guotai Junan International, said the weak numbers point to the need for more support from the Chinese government.
“However, the room for monetary policy easing is limited for now as the Chinese currency is under pressure,” Hao told Reuters.
“That said, fiscal policy will likely take over, suggesting the central government will need to issue more debt in the near future to boost overall domestic demand.”
None of this is likely to go unnoticed by Communist Party leaders meeting at the Third Plenum in Beijing later this month.