SME
In June, the supply and demand of the manufacturing industry both fell and the non-manufacturing boom fell, and the overall economic outlook and temperature fell.
In the manufacturing industry, affected by heavy rain and floods, the supplier allocation index fell in June, which in reverse boosted the manufacturing PMI, which rose 0.1 percentage points from the previous month. Excluding the impact of the supplier distribution index, the new orders and production index of the manufacturing industry both fell in June, and the weather temperature fell again. Among them, in the context of the decline in supply due to the reduction in the number of working days, the manufacturing PMI price index fell and the inventory of finished products rebounded, while the purchase volume of enterprises declined, reflecting that the demand still needs to be further boosted.
In terms of non-manufacturing, the prosperity of the service industry and the construction industry both fell in June. From the perspective of the service industry, under the fading of the holiday effect and the influence of rainy weather, residents' travel demand has declined; At the same time, the decline in the capital market has dragged down the demand for related services in the capital market. From the perspective of the construction industry, the low-level operation of the real estate boom is superimposed on the impact of rainy weather, and the PMI boom of the construction industry has further declined.
Looking ahead, the arrival of the summer travel season may drive the demand for residents' travel-related services to pick up, but the low operation of the real estate market will still put pressure on real estate investment and service demand.
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China's official manufacturing PMI in June 2024 was 49.5%, compared with 49.5% in the previous month; The official non-manufacturing PMI was 50.5%, compared with 51.1% previously. The composite PMI was 50.5%, compared with 51.0% in the previous month.
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On the one hand, the manufacturing production and new orders index in June fell by 0.2 and 0.1 percentage points respectively from the previous month, and the total of the two dragged down the manufacturing PMI by 0.1 percentage points from the previous month; on the other hand, affected by extreme weather such as heavy rain and floods, the manufacturing PMI supplier distribution index in June decreased by 0.6 percentage points from the previous month, and the extension of the delivery time of raw material suppliers pulled the manufacturing PMI back by 0.1 percentage points from the previous month. As a result, the manufacturing PMI in June was flat at 49.5% in the previous month. Excluding the observation of the supplier distribution index, the manufacturing PMI in June reflected the temperature and decline of the mainland economy.
1. Manufacturing: demand needs to be boosted
The manufacturing PMI recorded 49.5% in June, unchanged from the previous month. Combined with the sub-indicators, the supply and demand of the manufacturing PMI fell in June, and the lack of effective demand is still the main challenge facing the current economy, which is manifested in:
First, the manufacturing PMI new orders index has fallen for three consecutive months and is below the boom and bust line. The manufacturing PMI new orders index fell further by 0.1 percentage points from the previous month to 49.5% in June, the lowest value since March 2024. From the perspective of external demand, the overseas manufacturing industry rebounded but trade frictions heated up, and the new export orders index in June was flat at 48.3% in the previous month, the lowest value since March 2024. From the perspective of domestic demand, new export orders were stable in June while new orders fell, reflecting a decline in new orders related to domestic demand. In terms of industries, the PMI of the consumer goods industry recorded 49.5% in June, falling below the boom and bust line for the first time since December 2023, and consumer demand needs to be boosted; According to the Bureau of Statistics, the new orders index of chemical raw materials and chemical products, non-metallic mineral products and other industries all ran at a low level in June, and enterprises reported that the lack of effective demand was the main difficulty they are currently facing[1].
Second, the price of raw materials and ex-factory prices both fell. In June, the purchase price index and factory price index of major raw materials decreased by 5.2 and 2.5 percentage points from the previous month to 51.7% and 47.9% respectively, and the price index declined. From the perspective of supply factors affecting prices, under the combined influence of the decrease in the number of working days and the lack of demand, the manufacturing PMI production index in June fell by 0.2 percentage points and 50.6% from the previous month, the lowest value since March 2024. Supply and prices fell at the same time, reflecting the lack of demand as the main drag on the price pullback.
Third, the purchase volume has declined for three consecutive months and is below the boom and bust line. The purchase volume index in June fell by 1.2 percentage points from the previous month to 48.1%, the lowest value since March 2024, indicating that the procurement demand of enterprises has slowed down. By type of enterprise, the procurement demand of large enterprises and medium-sized enterprises declined, down 0.3 and 4.1 percentage points from the previous month to 50.8% and 46.3% respectively.
Fourth, the inventory of finished products rebounded. At a time when demand fell, the pace of corporate shipments slowed down, with finished goods inventories rising 1.8 percentage points from the previous month to 48.3% in June, and finished goods inventories rising to their highest since March 2024.
Second, the non-manufacturing industry: the economy has fallen
In June, the PMI of the construction industry and the service industry fell by 2.1 and 0.3 percentage points from the previous month to 52.3% and 50.2% respectively, and the prosperity of the non-manufacturing industry fell.
From the perspective of the construction industry, the real estate market demand bottomed out, and the heavy rainfall affected the construction progress of the construction industry, and the construction PMI fell to 52.3% for two consecutive months in June. Combined with high-frequency indicators, the cement shipment rate in June decreased by 0.8 percentage points from the previous month to 40.0%, and the cement demand slowed down in the context of the decline in the construction industry.
From the perspective of the service sector, the services PMI fell by 0.3 percentage points from the previous month to 50.2% in June, the lowest value since March 2024. On the one hand, under the combined influence of the fading holiday factor and the rainy weather, residents' travel demand declined, and the average number of domestic flights (excluding Hong Kong, Macao and Taiwan) in June was 367,000, a decrease of 21,000 from the previous month. On the other hand, the Shanghai Composite Index fell by 119.4 points from the previous month to 2,967.4 points in June, and the decline in the capital market boom dragged down the demand for related services in the capital market.
To sum up, the supply and demand of manufacturing PMI both fell and the non-manufacturing boom fell, and the economic outlook in June fell and fell. Among them, the new orders index of manufacturing, construction and service industry were 49.5%, 44.1% and 47.1% respectively, and the three were below the boom and bust line for two consecutive months, and demand needs to be further boosted. Looking ahead, on the one hand, the arrival of the summer travel season and the easing of heavy rain may lead to a rebound in demand related to residents' travel. On the other hand, the demand for real estate-related investment and services still needs to be boosted at the stage of grinding the real estate market.
Note: [1] Source: National Bureau of Statistics, "Zhao Qinghe, Senior Statistician of the Service Industry Survey Center of the National Bureau of Statistics, Interprets China's Purchasing Managers' Index in June 2024", 2024-06-30, [2024-06-30], https://www.stats.gov.cn/sj/sjjd/202406/t20240630_1955253.html
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