Asia Economy
Manufacturing activity in China and Japan contracted in June
By Michael Hennigan, Finfacts founder and editor
Jun 23, 2015 - 2:22 AM

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China's manufacturing PMI

China's manufacturing activity contracted for the fourth straight month in June as demand remained sluggish in the world's second-largest economy, a survey by British banking giant HSBC showed Tuesday.  Meanwhile, the Flash Japan Manufacturing PMI at 49.9 (50.9 in May) showed that operating conditions deteriorated slightly in June.

HSBC's preliminary Purchasing Managers' Index (PMI) came in at 49.6 in June, the highest in three months but still below the breakeven point of 50, the bank said in a statement.

The HSBC Flash China Manufacturing Purchasing Managers’ Index (PMI) is published on a monthly basis ahead of final PMI data, making the HSBC PMI the earliest available indicator of manufacturing sector operating conditions in China. The estimate is typically based on approximately 85%–90% of total PMI survey responses each month and is designed to provide an accurate indication of the final PMI data. June final PMI data will be released on 1 July 2015.

Annabel Fiddes, economist at Markit, which also compiled the survey, said: “The latest Flash China Manufacturing PMI survey provided a mixed bag of data in June. On the one hand, the sector shows signs of improvement as output stabilised amid a slight pick up in total new work, while purchasing activity also rose slightly over the month. On the other hand, manufacturers continued to cut their staff numbers, with the latest reduction the sharpest in over six years."

"This suggests that companies have relatively muted growth expectations as demand conditions both at home and abroad remain relatively subdued. The data add to evidence that the sector has lost growth momentum in Q2 as a whole, and suggests that the authorities may step up their efforts to stimulate growth and job creation in the second half of the year.”

Amy Brownbill, Economist at Markit, which also compiled the Japanese survey said: “Latest data signalled negligible deterioration in operating conditions at Japanese manufacturers. Production growth slowed to a fractional pace, while new orders contracted for the third time this year so far. Subsequently, employment growth was subdued, while buying activity declined.

“Meanwhile, reports of a favourable exchange rate and an increase in foreign demand led to a further rise in new export orders in June. Moreover, the latest expansion was the second-fastest since January and quicker than the series average.”

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