China Outlook Uneven recovery

Research evidence excerpt

China Outlook Uneven recovery

Barclays | China Outlook

Highlights of NBS manufacturing PMI breakdown

• On prices, manufacturing prices weakened, with the input price index falling to 54.2 and the

output price index slipping back into contractionary territory at 48.2, both below their

February survey readings which were collected before the Middle East conflict broke out on

27 February. The gap between the input and output price PMIs narrowed to 6.0pp in June

after reaching a four-year high of 8.6pp in April-May, reflecting some relief from lower input

costs. That said, the gap remained wider than the roughly 5pp average seen in January-

February before the conflict, indicating that margin pressures have eased but have not fully

returned to pre-conflicts levels.

• Both supply and demand indicators improved in June relative to May. The production PMI

edged up 0.2pp, to 51.4, while the new orders PMI returned to expansion territory at 51.2 from

49.9 in May. The improvement was accompanied by a rebound in the new export orders PMI,

which rose to 50.1 in June after falling to 48.6 in May. The RatingDog China manufacturing

PMI, which has greater exposure to export-oriented firms, remained broadly stable at 51.6 in

June. This capped the strongest quarter since Q4 2020, supported by robust export activity.

• High-tech manufacturing remained the strongest-performing segment, with its PMI rising to

53.5 in June from 52.9 in May, the highest in more than two years and above 50 for the 17th

straight month. Equipment manufacturing also strengthened, reaching a three-year high of

52.5. Consumer goods manufacturing returned to expansion territory, at 50.2 (May: 49.7),

though it continued to lag the headline PMI, while manufacturing in energy-intensive sectors

remained weak at 47.1.