\n \n \n “. concat(self. i18n. t(‘search. voice. recognition_retry’), “\n
BEIJING (Reuters) – Chinese factory activity likely rose in June for the first time in four months, driven by a faster recovery in production and a weakening of supply chain disruptions as production sites emerged from closures, a Reuters poll found on Wednesday.
The official purchasing managers’ index (PMI) of output is expected to reach 50. 5 in June, in a year, from 49. 6 last month, returning to expansionary territory for the first time since February, according to the median forecast of 30 economists surveyed. via Reuters.
A reading above 50 indicates an expansion from last month, below 50 a contraction.
An expansion in factory activity after 3 months of contraction adds to evidence that the world’s second-largest economy is charting a course to exit the supply-side shocks of COVID-19 lockdowns and may ease downward pressure on the yuan, which has lost 5% against the US dollar this year.
The main drivers would be an accelerated recovery in production amid the easing of COVID restrictions and, in all likelihood, increased demand for upstream production with a more potent seasoning for infrastructure, Morgan Stanley analysts said in a note.
Shanghai’s grocery shopping mall, at the production center in the Yangtze River Delta, ended a citywide shutdown on June 1, allowing more small factories in the region to resume production.
Although activity in China has gained momentum since the long COVID lockdown in April and May, headwinds persist, a still-sluggish real estate market, weak customer spending, and fears of a recurring wave of infections.
To stabilize the expansion and involve unemployment in a politically sensitive year, the State Council recently announced a comprehensive package of economic measures. President Xi Jinping is set to win his third term at the 20th Party Congress this fall.
Analysts say the official GDP target of around 5. 5% for this year will be tricky to achieve without abandoning the COVID 0 strategy.
Premier Li Keqiang pledged to achieve a moderate economic expansion in the current quarter, some private sector economists expect the economy to contract in the April-June quarter compared to last year, compared with the 4. 8% expansion in the first quarter.
The official production PMI, which largely focuses on giant and state-owned companies, and its sister survey for the sector, will be released on Thursday.
Caixin’s production PMI for the personal sector, which focuses more on small businesses and coastal regions, will be released on Friday. Analysts expect an index of 50. 1 for this, up from 48. 1 last month.
(Reporting through Ella Cao, Stella Qiu and Ryan Woo; Survey through Anant Chandak; Editing via Muralikumar Anantharaman)