China’s Factory Activity Keeps Growing, But at Slower-Than-Expected Pace By

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By Doris Yu – China’s in June but at a slower pace, falling to a four-month low. Manufacturers were grappling with new challenges such as higher raw material costs, as well as a recent outbreak of COVID-19 in Guangdong province.

China’s was 50.9 for June, according to data released by the National Bureau of Statistics (NBS) earlier in the day. It was slightly higher than 50.8 figure in forecasts prepared by but lower than May’s 51 reading. The was 53.5 in June, below May’s 55.2 figure.

They remained above the 50-mark, which separates growth from contraction on a monthly basis.

The data indicated that China’s economic recovery is steadying and more balanced among sectors following rapid growth from COVID-19. Chinese policymakers were optimistic about the economy, saying earlier this week that it’s showing more stability and strength despite global and domestic risks.

However, Chinese manufacturers are still facing challenges including higher raw material costs and global supply chain bottlenecks. Meanwhile, a recent outbreak of COVID-19 in Guangdong, a major export province, disrupted shipments.

Factors such as a shortage of semiconductors, inadequate coal supply, a power crunch and maintenance of equipment contributed to the slowdown in production, NBS senior statistician Zhao Qinghe told Reuters.

Factory output remained expansion but at a slower pace, and job sentiments have improved, said the NBS in a statement. The services sector was affected by the “impact of regional pandemic outbreaks.” It added that air transport, hotels and catering had contracted in June.

Despite an accelerating vaccination and demand recovery globally, the stimulus measures China rolled out during COVID-19 are likely to fuel inflation and weigh on China’s manufacturing sector.

China’s regulators, however, said it would take measures to curb any unreasonable surges in commodity prices.

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