Analysts at Standard Chartered note that China’s official manufacturing PMI moderated to 51.5 in June from 51.9 in May.
Key Quotes
“The production sub-index edged down by 0.5ppt to 53.6 on softer demand. The PMIs for new orders and new export orders eased. Non-manufacturing PMI rose for the fourth straight month to 55.0 in June as construction activity remained robust, while services PMI stayed flat at 54.0, suggesting solid sector performance.”
“Real activity was likely mixed in June. We expect industrial production (IP) growth to have slowed to 6% y/y in June due to softer production activity and a high base.”
“Retail sales growth likely remained soft on a high base and delayed automobile consumption. We expect Q2 GDP growth to have moderated to 6.6% y/y from 6.8% in Q1.”
“We expect CPI inflation to have picked up to 2.0% y/y in June, with interim data indicating a rebound in pork prices.”
“We expect FX reserves to have fallen due to FX valuation effects.”
“We expect the trade surplus to have widened in June.”
“We expect monetary policy to remain prudent and neutral, and the central bank to remove the tightening bias through marginal easing.”
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