Business

China’s June factory activity contracts more than expected

BEIJING: China's factory activity shrank more than expected last month, an official survey showed yesterday, highlighting the need for more economic stimulus as US trade tariffs ramped up pressure on its economy.

The weak manufacturing readings are likely to cast a shadow over the progress US and Chinese leaders made in Japan over the weekend in restarting talks over tariffs amid a trade war.

The indicators will spark concerns about stalling growth in China and the risk of a global recession, despite slightly better-than-expected export and industrial profits data in May.

The official Purchasing Managers' Index stood at 49.4 in June, unchanged from the previous month and below the 50-point mark that separates growth from contraction on a monthly basis. Analysts polled by Reuters had predicted a reading of 49.5.

Many economists expect the economy to face strong headwinds as domestic demand falters and external risks rise.

Last month, China's factory output growth slowed, with the sub-index falling to 51.3 from 51.7 in May, while the contraction in total new orders accelerated to 49.6 from 49.8.

Export orders extended their decline with the sub-index falling to 46.3 from May's 46.5, suggesting a further weakening in global demand.

Yesterday's data showed import orders also worsened, reflecting softening demand at home despite a flurry of growth-supporting measures rolled out this year.

An official business survey showed activity in China's services sector held firm despite growing pressure on the economy from tougher US trade measures, with the official reading at 54.2 in June from 54.3 in May. - REUTERS

BUSINESS & FINANCE