In June, Caixin China's manufacturing PMI recorded 49.4 retraction interval

The June Finance New China Manufacturing Purchasing Managers Index (PMI), released on July 1, recorded 49.4 percentage points, down from 0.8 percentage points in May. It fell below the dividing line of prosperity and decline for the first time in four months, indicating a marked decline in China's manufacturing prosperity. The trend is not consistent with the manufacturing PMI of the National Bureau of Statistics. The manufacturing PMI published by the National Bureau of Statistics in June recorded 49.4 in manufacturing PMI, which is the same as last month. Under the background that Sino-US trade frictions have not eased, the total volume of new orders and new export orders have declined. Among them, the total volume of new orders contracted for the second time since this year, but the extent is still moderate; while new export orders, which just resumed growth in May, fell again. In June, China's manufacturing output also ended the previous four consecutive months of growth and fell again, but the contraction was not significant. Classified data show that the consumer category was the only category that recorded output growth in June.

In June, the scale of employment in manufacturing industry also continued to shrink, the contraction range was similar to that in the previous two months. According to reports, after the voluntary departure of employees, the manufacturer did not fill the vacancy. This has exacerbated the pressure on manufacturers'production capacity. The backlog workload continued to rise in June, but the overall backlog is still small, similar to the previous two months.

Because of the decline in total new orders and production, manufacturers reduced their purchasing volume slightly in June, failing to continue the expansion trend of last month, while purchasing inventory increased. Due to the decline in production, in order to deliver new orders, manufacturers increased the use of existing inventory, resulting in further decline in finished product inventory.

In June, the average input cost of manufacturing industry rose to a seven-month high, while the ex-factory price of manufacturing products also rose slightly, breaking the May level.

Because Sino-US trade friction has significantly affected enterprise confidence, the optimism of manufacturers continues to decline, which is the lowest since April 2012. Some manufacturers expect new products and expansion plans to help boost production in the coming year, while others are concerned about Sino-US trade disputes. Zhong Zhengsheng, chairman and chief economist of Monita Research, a financial think tank, said that in June, China's manufacturing boom declined significantly, the economy was under further pressure, domestic demand contracted significantly, external demand was still supported by the "export rush" factor, and entrepreneur confidence declined rapidly. Further development of counter-cyclical policies is necessary. New infrastructure, high-tech manufacturing and consumption may become the main focus of policies.