China's manufacturing PMI in June is not as good as expected

According to data released by the National Bureau of Statistics, China's Manufacturing Purchasing Managers Index (PMI) recorded 49.4% in June, unchanged from last month. Analysts believe that although China's economy is still facing a major downturn, manufacturing activity is expected to improve in the second half of the year as policy dividends such as tax cuts, fee cuts and cost cuts gradually fall. Before the release of the data, the median estimated PMI of seven organizations interviewed by the interface news showed that the PMI of China's manufacturing industry was 49.7% in June. The PMI index is above 50, reflecting the overall expansion of the economy; below 50, reflecting the economic recession. Zhao Qinghe, a senior statistician at the Service Industry Survey Center of the National Bureau of Statistics, pointed out that the transformation and upgrading of manufacturing industry continued to advance, and the role of middle and high-end manufacturing industry and consumer goods manufacturing industry in promoting economic growth was further strengthened. In June, the production indices of high-tech manufacturing, equipment manufacturing and consumer goods industries were 55.6%, 53.3% and 52.2% respectively, which were higher than the overall 4.3%, 2.0 and 0.9 percentage points of manufacturing industry. At the same time, he said that the motive force of market order growth was weak and the environment of foreign trade development was tightening. In June, the new order index was 49.6%, down 0.2 percentage points from last month, and was in a contraction range for two consecutive months. Among them, the index of new export orders reflecting foreign demand was 46.3%, which was lower than 0.2 percentage points last month, a new four-month low. Analysts believe that external pressure combined with weak domestic demand remains unchanged, China's economy may continue to be under pressure in the second half of the year, and stable growth policy may be further increased. In terms of fiscal policy, the actual fiscal deficit may increase to support stable investment; in terms of monetary policy, the central bank may lower interest rates and support the smooth operation of the economy.

China Gold Corporation pointed out in its research that fiscal easing still has much room to hedge the impact of trade tension on domestic manufacturing enterprises'profits. Implementing a good tax reduction and fee reduction policy is expected to promote the transformation of economic growth from external demand to domestic demand.

Large-scale tax and fee reduction is an important part of this year's government work. According to the latest data released by the State Administration of Taxation, from January to May, a total of 893 billion yuan of new tax and fee reductions were added, of which 816.8 billion yuan of new tax reductions and 76.2 billion yuan of new social security premiums were added.

According to the plan announced by the State Council, a series of new fee reduction measures, such as reduction and exemption of real estate registration fees and reduction of fee standards for private ordinary passports, will come into effect from July 1. It is expected that more than 300 billion yuan will be reduced for enterprises and the masses throughout the year after implementation. At present, the effect of tax reduction is gradually reflected in the profits of enterprises. According to the statistics bureau, the profits of Industrial Enterprises above the national scale increased by 1.1% in May and decreased by 3.7% in April. Analysts pointed out that the profit growth rate of industrial enterprises in May deviated from volume (industrial added value) and price (PPI), indicating that the effect of tax reduction fell. The data released by the National Bureau of Statistics on Sunday also showed that China's non-manufacturing business activity index recorded 54.2% in June, down 0.1 percentage points from last month. From the industry perspective, the business activity index of railway transportation, air transportation, telecommunications, banking, insurance and other industries is located in the high boom zone of 59.0% or more, and the total business volume is growing rapidly. The business activity index of road transportation, accommodation, catering, residential service and repair industries is below the critical point, and the total business volume has fallen back.

From the perspective of market expectation, enterprises are optimistic about the recent market development. The expected index of service business activities is 60.3%, which is 0.8 percentage points higher than last month. The 21 industries surveyed are all in the expansion range. Among them, the expected index of business activities in retail, railway, air transport, catering, cultural, sports and entertainment industries is higher than 62.0%, indicating that with the approaching of summer vacation, the industries related to summer consumption are more optimistic about the recent market development.