China’s factory activity likely returns to growth in June as PMI inches above the expansion line

China’s manufacturing sector appears to have found a pulse, though calling it robust would be generous. A Reuters poll of 23 economists projects the country’s official manufacturing Purchasing Managers’ Index will land at 50.1 in June, up from May’s reading of exactly 50.0.

The 50-point mark on the PMI scale is the dividing line between growth and contraction. May’s reading sat right on the fence at 50.0, which itself followed a 50.3 print in April.

What’s driving the number

On the export side, shipments of automated data processing equipment surged over 60% year-over-year. Chips, semiconductors, and AI-adjacent hardware are keeping the lights on in Chinese factories.

Furniture exports, a proxy for more traditional manufacturing, grew just 1.9%. May retail sales in China fell for the first time in over three years. A prolonged property crisis continues to weigh on household confidence, inventory levels are diminishing, and credit demand has slowed enough that China’s central bank has reportedly directed banks to step up lending in June.

Mixed signals from private surveys

A private-sector survey by RatingDog is expected to show a slight decline in its own PMI reading, from 51.8 in May to 51.6 in June.

The official PMI tends to skew toward larger, state-owned enterprises. Private surveys like RatingDog’s capture more of the smaller, export-oriented firms.

What this means for investors

Recent macroeconomic reports have noted that risk assets, including digital assets, face pressure from inconsistent economic indicators and elevated interest rates.

The official PMI data is scheduled for release by China’s National Bureau of Statistics. If it comes in below 50, expect a sharper market reaction than the muted response a 50.1 print would generate.

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