Higher Costs and Supply Issues Drag Chinese Manufacturing to Four-Month Low

Source: National Bureau of Statistics

China’s factory output continued to expand in June, but growth fell to its lowest level since February as firms were hit by raw material costs and supply issues.

• The Purchasing Managers Index (PMI) fell to 50.9 from 51.0 in May, but still above the 50.0 threshold that separates expansion and contraction.
• The Non-manufacturing PMI eased to 53.5 from 55.2 in the previous month, while the Composite PMI declined to 52.9 from 54.2.
• The Production Index fell to 51.9 from May’s 52.7, and the same with February.
• New orders posted a slight growth, with in-hard orders and finished goods both registering month-on-month gains.
• Raw materials inventory rebounded in June, after the decline recorded in May. Purchase price remained elevated, but lower month-on-month. 
• The employment and supplier delivery time indexes also rebounded, following the dip recorded the previous month.
• Expected production and business activities fell to the same level as January, and the worst since June 2020.
• Analysts attribute the latest figures to the global chip shortage, and the impact of the COVID-19 pandemic on business operations.