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The
official manufacturing Purchasing Managers' Index(PMI) is
expected to have slipped to a four-month low of 50.0 in June
from 50.1 in May, according to the medium forecast of 32
analysts polled by Reuters.
That would fall right on the 50.0 mark that separates expansion
in activity from contraction on a monthly basis.
China's manufacturing activity had expanded for three
consecutive months from March to May, after seven months of
prolonged contraction, fueling hopes that government attempts to
stimulate the economy were gaining traction.
More recent data, however, has shown that growth remains
fragile, and the tepid forecast for June's activity reflects
worries that momentum in the world's second-largest economy has
continued to slow.
"Fixed income, investment, trade and output data all pointed to
the fact that growth in the economy has slightly eased," Zhou
Jingtong, a researcher with Bank of China said, adding that a
drop in commodities would drag on the PMI reading in June.
Weaker-than-forecast data might prompt China to ramp up its
growing fiscal spending even further and loosen monetary policy
again, Zhou said.
Uncertainties about the global economy have also spiked after
Britain voted last week to leave the European Union. While it is
not expected to have an immediate impact on China, prolonged
uncertainty could dent business confidence and hurt demand in
Western Europe, one of China's biggest markets.
Premier Li Keqiang on Monday reassured investors that China will
be able to maintain stable economic growth this year and in the
long term. He said short-term volatility in the economy is hard
to avoid, but China has enough room to use policy tools to help
support the economy.
The official manufacturing PMI data will be released on July 1,
along with the official services PMI. China's statistic bureau
will release second-quarter gross domestic product figures on
July 15.
The Markit/Caixin PMI, a private gauge of manufacturing
activity, also is due on July 1. Analysts expect it to dip to
49.1 from 49.2 in May, suggesting activity at China's factories
shrank for a 16th straight month.
(Corrects headline and first paragraph to reflect that data is
for June, not May corrects poll link in bullets corrects first
quote in para 6 to "fixed asset investment" from "fixed income")
(Reporting by Meng Meng and Nicholas Heath; Editing by Kim
Coghill)
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