China's manufacturing activity returned to expansion territory in June, while the services sector continued its steady growth, indicating a sustained improvement in the overall economic climate.

Data released on June 30th by the National Bureau of Statistics shows the manufacturing Purchasing Managers' Index (PMI) rose to 50.3% in June, an increase of 0.3 percentage points from the previous month, moving back above the expansion-contraction threshold of 50. Concurrently, the non-manufacturing Business Activity Index and the composite PMI output index stood at 50.2% and 50.6% respectively, each edging up by 0.1 percentage points from May.

Huo Lihui, Chief Statistician at the NBS Service Industry Survey Center, stated that the data indicates a recovery in China's economic climate. The key highlights for the month were the simultaneous expansion in both production and demand within manufacturing, and the continued leadership role of high-tech manufacturing.

The primary driver for the June manufacturing PMI rebound was a marked improvement on the demand side. The new orders index climbed to 51.2%, a significant jump of 1.3 percentage points from May, re-entering expansion territory. The production index reached 51.4%, up 0.2 percentage points, confirming the simultaneous expansion of both supply and demand.

High-tech manufacturing performed particularly well. The high-tech manufacturing PMI for June was 53.5%, rising 0.6 percentage points from the previous month and notably higher than the overall manufacturing level, indicating a strengthening of its leading role.

Meanwhile, the services sector's business climate continued to improve. The services Business Activity Index for June was 50.4%, up 0.1 percentage points from May. Sectors such as telecommunications, radio, television, and satellite transmission services; internet software and information technology services; monetary and financial services; and insurance all had business activity indices well above 55.0%, indicating rapid growth in business volume.

Manufacturing PMI Climbs into Expansion Zone

In June, the manufacturing Purchasing Managers' Index (PMI) was 50.3%, an increase of 0.3 percentage points from the previous month, returning to expansion territory.

By enterprise size, the PMI for large enterprises was 50.7%, down 0.4 percentage points from May but still above the threshold. The PMI for medium-sized enterprises was 50.5%, up 1.9 percentage points and above the threshold. The PMI for small enterprises was 48.2%, down 0.3 percentage points and below the threshold.

Among the five sub-indices that constitute the manufacturing PMI, the production index and the new orders index were above the critical point, while the raw materials inventory index, the employment index, and the supplier delivery time index were below it.

The production index was 51.4%, up 0.2 percentage points from the previous month, indicating that manufacturing production activity accelerated its expansion.

The new orders index was 51.2%, up 1.3 percentage points, indicating a recovery in market demand for manufactured goods.

The raw materials inventory index was 48.4%, down 0.2 percentage points, indicating a continued decline in the stock of main raw materials for manufacturers.

The employment index was 48.5%, down 0.1 percentage points, indicating a slight decline in the employment climate for manufacturing firms.

The supplier delivery time index was 49.9%, up 0.7 percentage points but still below the threshold, indicating that delivery times from suppliers of manufacturing materials slowed slightly.

Non-Manufacturing Business Activity Index Edges Higher

In June, the non-manufacturing Business Activity Index was 50.2%, a slight increase of 0.1 percentage points from the previous month, indicating a modest recovery in the non-manufacturing sector's climate.

By sector, the construction Business Activity Index was 49.0%, up 0.2 percentage points. The services Business Activity Index was 50.4%, up 0.1 percentage points. Within services, sectors such as telecommunications, radio, television, and satellite transmission services; internet software and information technology services; monetary and financial services; and insurance all had business activity indices in the high-climate zone above 55.0%. Sectors like air transport and real estate had business activity indices below the critical point.

The new orders index was 48.0%, up 3.0 percentage points, indicating a significant improvement in the demand climate for non-manufacturing. By sector, the construction new orders index was 46.3%, up 2.8 percentage points, while the services new orders index was 48.4%, up 3.1 percentage points.

The input price index was 49.7%, down 2.5 percentage points and below the threshold, indicating an overall decline in the price level of inputs for non-manufacturing business activities. For construction, the input price index was 50.4%, down 3.3 percentage points, while for services it was 49.6%, down 2.4 percentage points.

The selling price index was 48.4%, down 0.4 percentage points, indicating a continued overall decline in the selling prices of non-manufacturing firms. For construction, the selling price index was 49.8%, up 1.2 percentage points, while for services it was 48.2%, down 0.7 percentage points.

The employment index was 45.8%, up 0.2 percentage points, indicating an improvement in the employment climate for non-manufacturing firms. For construction, the employment index was 42.3%, up 0.9 percentage points, while for services it was 46.4%, unchanged from the previous month.

The business activity expectation index was 55.3%, up 0.5 percentage points, indicating that non-manufacturing firms maintain a positive overall outlook on market development. For construction, the expectation index was 51.1%, down 0.4 percentage points, while for services it was 56.0%, up 0.6 percentage points.

Composite PMI Output Index Maintains Expansion

In June, the composite PMI output index was 50.6%, up 0.1 percentage points from the previous month, indicating a slight acceleration in the overall expansion of business activities for Chinese enterprises.