Production growth rate was the fastest in two years, underpinned by rising new orders. Firms also acquired more inputs to support production, leading to higher stocks of purchases.

Employment numbers were little changed, however.

On the price front, input cost inflation climbed to the highest since June 2022, resulting in the first increase in average selling prices so far this year.

Firms were, however, concerned about rising competition and the possibility of slower growth ahead. Optimism was subsequently the lowest since November 2019, a release from S&P Global said.

The headline seasonally-adjusted PMI—a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy—rose to 51.8 in June, up from 51.7 in May. This indicated an eighth successive monthly improvement in the health of the sector. Furthermore, the rate of growth was the fastest since May 2021.

Manufacturing output expanded at the quickest pace in two years, with firms in the consumer segment once again recording especially sharp output growth in June. This was driven by higher new work inflows, attributed to new product launches and market development efforts by manufacturers.

Export orders also continued to rise, though both the rates of new and export order books growth declined from May.

The rise in new work intakes led to a fourth successive month of backlog accumulation. Some manufacturers opted to raise their staffing levels, though offset by redundancies and resignations at other firms. Overall, employment was subsequently close to stabilisation in June.

Purchasing levels were also raised at one of the highest rates in more than three years to keep pace with the increase in production. This led to a further accumulation of stocks of purchases. At the same time, stocks of finished goods increased marginally after depleting in May.

Suppliers' delivery times lengthened for the first time since February. Although marginal, this was just the third time that lead times have lengthened in the past nine months. Input material shortages and delivery constraints were often mentioned by panellists as reasons for the delays.

Further to the lengthening of delivery times, transport costs increased as well, which drove up average input costs alongside rising raw material prices. The rate of input price inflation climbed to the highest in two years, and spurred firms to lift selling prices for the first time in six months.

The increase in average selling prices was the fastest in eight months and broad-based by industrial group. Export charge inflation also rose to a two-and-a-half year high.

Sentiment in the Chinese manufacturing sector, however, remained positive midway into 2024. The level of confidence fell to the lowest in over four-and-a-half years, dampened by concerns over rising competition and uncertain market conditions.

Fibre2Fashion News Desk (DS)