China’s Factory Activity Slows Down but Non-Manufacturing Sector Thrives as Beijing Prepares for the Third Plenum

In June, factory activity in China continued to decline for the second month in a row, posing challenges for the world’s second-largest economy as it prepares for the upcoming third plenum. Despite this, the official manufacturing purchasing managers’ index (PMI) remained at 49.5 in June, indicating a contraction in activity. Meanwhile, the new manufacturing export order subindex also remained unchanged at 48.3 in June.

On the other hand, the non-manufacturing PMI, which measures sentiment in the service and construction sectors, fell to 50.5 in June, down from 51.1 in May. However, despite this drop, the non-manufacturing sector has been expanding for the past six months. The third plenum is expected to unveil major economic strategies for the next five to ten years and is highly anticipated by top Communist Party officials who will gather in Beijing in two weeks to provide crucial insight into China’s economy direction.