Manufacturing growth momentum continues

Editor's note: China's official purchasing managers' index for the manufacturing sector rose to 50.3 in June, up 0.3 points month-on-month, data from the National Bureau of Statistics showed on Tuesday. Xinhua News Agency spoke to Huo Lihui, an NBS statistician, and Wen Tao and Wu Wei, both analysts at the China Logistics Information Center, to interpret the data. Below are excerpts of the interview. The views don't necessarily represent those of China Daily.

The primary driver of this growth is domestic demand. At the same time, external demand showed signs of recovery, with new export orders index rebounding to 50.1 in June, marking a return to expansion territory.

Supported by demand, the manufacturing sector maintained steady growth in output. On a quarterly basis, the production index stood at 51.4 in June, higher than both the first-quarter average and the level recorded a year earlier.

Sales also remained relatively smooth in June. The finished goods inventory index fell 1.6 points from the previous month to 47.7, suggesting that inventories were being cleared at a faster pace.

While stronger production activity boosted purchases of raw materials, the growth in prices of manufacturing raw material slowed down significantly in June, largely due to the decline in international prices of major commodities such as crude oil and industrial metals.

The data also point to a clear shift toward new growth drivers in the manufacturing sector, with consistent improvements in the industrial structure. This positive trend has strengthened business sentiment. The manufacturing business activity expectation index rose to 54.3 in June, up 0.4 points from the previous month, reflecting growing confidence among manufacturers.

The nonmanufacturing business activity index also improved in June, rising 0.1 point from the previous month to 50.2. As more reserve projects move into the construction phase, the demand related to infrastructure development is expected to rise further. More specifically, the construction business activity index increased by 0.2 points from the previous month, while the sector's business activity expectation index came in at 51.1, indicating that expansion is expected to continue.

The improvement in manufacturing activity is also spreading to the distribution sector. In June, the wholesale business activity index climbed above 52, up by more than 4 points from both the previous month and the same period last year. Meanwhile, the new orders index also rose above 50, increasing by more than 5 points from both a month earlier and a year earlier.

As policies aimed at stabilizing growth and expanding domestic demand gain further traction, latent demand in both investment and consumption is expected to translate more quickly into actual demand, reinforcing the foundations for steady and sustained economic growth.

One issue that warrants attention is that the new orders index has fluctuated more sharply than the production index this year, mainly because exports remain susceptible to changes in the international environment. Given persistent geopolitical uncertainties, the sustainability of the recovery in market demand will require close monitoring.