China’s manufacturing sector showed unexpected signs of growth in June, according to the Caixin/S&P Global manufacturing PMI, which rose to 50.4, beating expectations and rebounding from May’s 48.3 reading.
The data indicates a return to expansion among export-focused manufacturers, diverging from the country’s official PMI, which reflected continued contraction for a third straight month.
Analysts attribute the surprise improvement to increased production, spurred by promotional activity and a temporary boost in trade conditions following the U.S.-China tariff reduction in May.
However, challenges remain. Export orders declined for a third consecutive month, and employment levels weakened, especially in consumer goods manufacturing. Ongoing price wars also pressured profit margins, forcing manufacturers to cut prices.
Despite the temporary rebound, economists warn of underlying demand issues and uncertainty over the U.S.-China trade truce, which is set to expire in August.
