China's PMI falls for second straight month to 52.1% in June

01 July 2010 10:45  [Source: ICIS news]

SHANGHAI (ICIS news)--China’s June purchasing managers’ index (PMI) has slipped 1.8 percentage points from May, with export orders likely to slow in the months ahead partly due to the eurozone crisis, the National Bureau of Statistics (NBS) said on Thursday.

PMI was on its second month of decline in June at 52.1% but has remained on an expansion mode, with a reading of above 50% in 16 consecutive months, the NBS said on its website. In May, the PMI reading was 53.9%.

A PMI reading above 50% indicates an expansion while a reading below 50% means a contraction.

Among the PMI's 20 sectors, the production index fell by 2.4 percentage points from May to 55.8% in June and new orders index decreased by 2.7 percentage points to 52.1%, according to NBS.

The index for new export orders in June also fell by 2.1 percentage points over the previous month to 51.7%, it said.

“It [the index for the new export orders] is still above 50%, indicating that manufacturing exports have maintained an uptrend,” the NBS said.

“However, export orders growth will be slower due to gradual impacts from the eurozone debt crisis and China’s recent move to scrap export rebates,” the government institution said.

Meanwhile, the key raw materials purchasing price index fell by 7.6 percentage points to 51.3% - the lowest recorded since April 2009 - as commodities prices, including steel, non-ferrous metals and crude oil, declined, the NBS said.

In the new few months, China’s overall PMI may continue to fall given current restrictions on energy-intensive industries, in line with the govermment’s pursuit of sustainable growth, analysts said.

The index released by the China Federation of Logistics & Purchasing (CFLP) and NBS serves as a barometer of the monthly performance of China’s factories and is based on surveys conducted with purchasing and supply managers at more than 700 manufacturers across 20 industries across the country.

The PMI covers the following sectors: chemical fibre, rubber and plastics products, chemical raw materials and chemical products manufacturing industry, petroleum processing and coke industry, textiles and metal products.

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By: Judith Wang
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