By Bloomberg — June 30, 2026, 8:27:55 AM IST
China’s factory sector and broader activity outperformed expectations in June, as a surge in exports helped offset softer domestic demand. The National Bureau of Statistics reported the official manufacturing PMI rose to 50.3 in June, up from 50.0 in May and back above the 50 mark that separates expansion from contraction. Activity in construction and services also ticked up unexpectedly to 50.2.
A subindex tracking overall orders climbed to a three-month high, suggesting some relief for sales at home. High-tech manufacturing led the gains: its PMI was 53.5, “significantly higher” than the aggregate factory reading, NBS statistician Huo Lihui said, adding that high-end manufacturing’s development and leading role continued to strengthen.
Still, the data underscore an uneven recovery. Employment and inventory metrics in manufacturing remain weak, signaling the improvement is not yet broad-based. Hao Zhou, chief economist at Guotai Junan International Holdings, called the PMI a “moderately positive surprise for markets” but warned that the recovery is patchy given the slumping labor and stock indicators.
Financial markets moved little on the release: the yield on China’s 10-year government bond inched up one basis point to 1.72%, while the yuan was stable in onshore and offshore trading, putting it on track for a June decline versus the dollar after several months of strength.
Export strength has been a key cushion for industrial output this year, helped further by a global AI-driven investment cycle boosting demand for Chinese hardware. In May, export prices rose at their fastest pace in more than three years. But external tensions persist: the European Union is considering measures to address a flood of Chinese goods, and EU and Chinese officials agreed to aim for progress on disputes by an October deadline, officials said.
Investors are watching policymakers for support. China’s central bank recently set the rate on a new overnight liquidity tool below market expectations, a move some analysts interpret as an effective rate cut to lower borrowing costs and shore up growth.