The manufacturing purchasing managers’ index published by the National Bureau of Statistics fell to 49.9 in June, below the 50-point line delineating growth from contraction for the first time in four months. That was just a hair below a consensus forecast from economists of 50 that would have meant activity neither rose nor fell compared to the previous month.
In an explanatory note the bureau suggested the primary factor behind the fall was a particularly strong El Nino effect, pointing to heavy rains and flooding in most of China’s provinces, particularly those along the Yangtze River Basin, which had impacted production (down 0.4 percentage points to 52.1) and transportation, among other things. But it also acknowledged a marked backslide in market demand.
Economic stimulus continued to chiefly benefit large-scale enterprises, where PMI came in at 51.2, up 0.2 percentage points from June. Mid-sized and smaller enterprises both saw activity contract more severely with readings of 48.9 and 46.9 for the period respectively.