China NBS PMI Marginal improvement

Research evidence excerpt

China NBS PMI Marginal improvement

Economics ● China

30 June 2026

Chart 1. K-shaped recovery was still Chart 2. Lower global crude oil prices

evident in June PMI data helped ease firms’ profit margin squeeze

54 Manufacturing PMI, index 80 NBS Manufacturing PMI Gap, index pt 15

53 75

52 70 10

51 65

50 60 5

49 55

48 50 0

47 45

46 40 -5

Jun-24 Nov-24 Apr-25 Sep-25 Feb-26 35

Hi-tech 30 -10

Equipment Dec-16 Dec-18 Dec-20 Dec-22 Dec-24 Consumer goods

Intensive energy-consuming Input prices Output prices

Headline Price gap (Input-Output)

Source: CEIC, HSBC Source: CEIC, HSBC

On the pricing front, as easing Middle East tensions have led to a sharp fall in global oil prices, domestic input-cost and output-price

indicators also cooled. This certainly offered the much-needed relief to midstream and downstream players, whose profit margins are

under further pressure if energy costs stay elevated for longer. In June, the input-output price gap narrowed to 6.0pts versus 8.6pts in

May. Even so, it’s still wider than pre-conflict levels, underscoring firms’ continued reluctance to pass higher costs on to consumers.

Meanwhile, as we noted in China inflation (10 June), the recent rise in PPI inflation was also partly driven by increases in AI-related

material costs. Factoring in base effects, PPI will likely need more time to reverse its current trend, as today’s data suggests y-o-y

PPI growth could still tick up in June.

Services activity should also benefit from lower energy costs, as refined oil remains an input for sectors such as logistics and air

transport. Meanwhile, the NBS also noted that business activity indexes for internet software and information technology

services, monetary and financial services, and insurance all stood above 55 (NBS, 30 June).