China's manufacturing sector grows for 7th consecutive month, while optimism continues

China's manufacturing activity expanded for a seventh consecutive month, buoyed by sustained growth in new orders and a marked easing of cost pressures, a private survey showed on Wednesday.

The RatingDog China General Manufacturing Purchasing Managers' Index — which gauges operating conditions in the sector — came in at 51.7 in June, edging down from 51.8 in May, but staying above the 50-point mark that separates expansion from contraction, the survey showed.

The index averaged 51.9 in the second quarter, pointing to the strongest quarterly performance in China's factory activity since late 2020, according to the survey.

"The manufacturing sector maintained steady expansion in June," Yao Yu, founder of RatingDog, said, citing sustained growth in new orders and a notable easing of cost pressures as key factors behind the solid performance.

The strength was reflected in new orders received by Chinese manufacturers, which rose for the 13th consecutive month in June and continued to support a further expansion in production, the survey showed.

Meanwhile, cost pressures showed a marked easing. Although average input prices paid by Chinese manufacturers rose for the 12th consecutive month in June, the pace of the increase slowed to its weakest since January, the survey showed.

"The rise in raw material purchase prices narrowed significantly from May, reaching a five-month low and helping rein in months-long inflationary pressure," Yao said.

The survey also pointed to continued confidence among manufacturers, with enterprises remaining upbeat about the 12-month outlook for output, supported by expectations of stronger new orders, business expansion, new product launches, and improved production capacity, even as overall optimism moderated slightly.

Looking ahead, Yao said China's manufacturing PMI is expected to stay in expansionary territory in the near term, although the pace of expansion may become more moderate.