China's Factory Activity Expands in June Driven by Tech Exports
Official PMI rises to 50.3, exceeding expectations and signaling renewed momentum, largely due to demand for AI hardware.
China's factory activity saw an increase in June, with the official manufacturing purchasing managers index (PMI) rising to 50.3 from 50 in May, surpassing economists' forecasts. This expansion, measured on a scale where above 50 indicates growth, was primarily fueled by robust demand for artificial intelligence hardware, which boosted exports.
The sub-index for new orders climbed to 51.2 in June, up from 49.9 the previous month, while the production sub-index also saw an increase to 51.4 from 51.2. Huo Lihui, a chief statistician at the National Bureau of Statistics, stated that the June data reflects a warming economic climate for China.
Experts noted that external demand remains a critical driver for China's manufacturing sector. However, some economists cautioned that domestic demand remains sluggish, influenced by consumer caution stemming from a prolonged property sector downturn. Further government support for domestic consumption and investment could help foster a more balanced growth pattern, according to Lynn Song, chief economist for Greater China at ING Bank.
Chinese leaders have set an annual economic growth target of 4.5% to 5% for the year, a goal that economists anticipate the country will likely meet, supported by the surge in AI-related exports.