China’s manufacturing sector appears to have found a pulse, though calling it robust would be generous. A Reuters poll of 23 economists projects the country’s official manufacturing Purchasing Managers’ Index will land at 50.1 in June, up from May’s reading of exactly 50.0.
The 50-point mark on the PMI scale is the dividing line between growth and contraction. May’s reading sat right on the fence at 50.0, which itself followed a 50.3 print in April.
What’s driving the number
On the export side, shipments of automated data processing equipment surged over 60% year-over-year. Chips, semiconductors, and AI-adjacent hardware are keeping the lights on in Chinese factories.
Furniture exports, a proxy for more traditional manufacturing, grew just 1.9%. May retail sales in China fell for the first time in over three years. A prolonged property crisis continues to weigh on household confidence, inventory levels are diminishing, and credit demand has slowed enough that China’s central bank has reportedly directed banks to step up lending in June.
