Across The Border | China’s softening PMI data suggests growth has peaked and capital outflows may revive
A mini rebound which underpinned economic growth in China in the second quarter looks set to lose steam while capital outflows may surge again, triggered by concerns over a wider domestic slowdown and external volatilities after Brexit, analysts said.
China’s manufacturing purchasing managers index (PMI) for June stood at 50, the line dividing improvement from deterioration, down slightly from 50.1 in May. The non-manufacturing PMI gauge rose to 53.7 from 53.1 in May, according to statistics issued by the National Bureau of Statistics last Friday.
Elliot Clarke, senior economist at Sydney-based Westpac Bank, said the numbers show that total growth in China was stagnant and external weaknesses continue to present a material risk to the outlook.
“Looking ahead, total new orders are yet to show a noticeable improvement…export orders continue to decline. Finished inventories continue to contract, but the order to inventory ratio remains near its long-run average…we have some way to go before activity improves,” he said.
Economists with UBS said in a note issued on Monday that the second quarter would mark a peak in economic rebound momentum, before gross domestic product (GDP) growth slows modestly to 6.6 per cent in the third quarter, and 6.5 per cent in the fourth quarter.
