CHINA: PMIS REBOUND IN JUNE – UOB

Economist at UOB Group Ho Woei Chen, CFA, reviews the latest PMI results in the Chinese economy.

KEY TAKEAWAYS

“China’s official manufacturing and non-manufacturing Purchasing Manager’s Indexes (PMIs) rebounded into the expansion territory (defined as reading above 50) in Jun after three months in contraction as Shanghai lifted lockdowns.”

“This reaffirms expectation of an economic recovery in China that will likely pick up momentum in the second half of the year alongside stimulus measures rollout. Underlying weakness in employment and selling/ output prices (for both manufacturing and non-manufacturing) indicate that the recovery remains fragile.”

“Given the fragile outlook, we maintain our view that there is room for further monetary policy easing. PBoC Governor Yi Gang recently suggested this will likely be via boosting credit rather than interest rate cuts as China’s ‘real interest rate is pretty low’.”