June RatingDog China Manufacturing PMI Eased Slightly to 51.7, Remaining in Expansion Territory

Overview

This report comments on the performance of the unofficial China Manufacturing PMI in June. The RatingDog China Manufacturing PMI edged down from 51.8 in May to 51.7 in June, below both the GS forecast and the Bloomberg consensus expectation, but remained above 50. The report emphasizes that although the RatingDog PMI fell and the NBS Manufacturing PMI rose, both point to continued expansion in manufacturing activity.

Core views

The core view is that manufacturing conditions remain in expansion territory, but momentum is slowing at the margin; new orders and employment improved, while output, inventories, and export orders were weaker. On prices, input prices fell notably, indicating that cost pressures eased significantly in June, while output prices still rose slightly, showing that the process of passing costs downstream is continuing.

Analysis framework

The report uses a breakdown of the headline PMI and subindices, compares the June data with May, the GS forecast, and the Bloomberg consensus expectation, and combines this with changes in the NBS Manufacturing PMI and Brent crude prices to assess marginal changes in manufacturing activity, external demand, inventories, and price pressures.

Methodology notes

• Macro IndicatorsPMI Boom-Bust Line Framework

  A PMI above 50 usually indicates expansion in economic activity, while below 50 indicates contraction.

  Based on this, the report judges that both the RatingDog and NBS Manufacturing PMIs were above 50, indicating that China's manufacturing activity was still expanding in June.

• Subindex AnalysisManufacturing PMI Subcomponent Breakdown

  Observe the structure of conditions through subcomponents such as new orders, output, employment, supplier delivery times, inventories, export orders, and prices.

  The report shows that new orders and employment improved, while output, raw material inventories, finished goods inventories, and export orders weakened, indicating that the expansion was uneven in structure.

• Cost and Price TransmissionInput Prices vs. Output Prices Comparison

  Input prices reflect upstream cost pressures, while output prices reflect companies' ability to pass costs downstream.

  The input prices index fell notably in June, while the output prices index rose slightly and remained above 50 for a sixth consecutive month, indicating that cost pressures eased but price transmission is still ongoing.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• China manufacturing-related assets

  A PMI above 50 supports the macro narrative of continued expansion in manufacturing activity.

  Strengths

  The headline index remains in expansion territory, and the new orders and employment subindices improved.

  Weaknesses

  The output, inventory, and export orders subindices weakened, and external demand remains below 50.

  Comparison

  Compared with May, the RatingDog PMI edged down; compared with the NBS PMI, the directions differed but both remained above 50.

  Risks

  If export orders remain below 50 or inventories continue to decline, manufacturing expansion momentum may weaken.

• Commodities and Brent crude

  The decline in oil prices is associated with a significant drop in the manufacturing input prices index.

  Strengths

  Easing cost pressures may improve profit margins for downstream manufacturers.

  Weaknesses

  Output prices are still rising, indicating that price transmission has not yet ended.

  Comparison

  Brent crude prices fell from above $100/bbl in May to below $80/bbl in June.

  Risks

  If oil prices rebound, input cost pressures may rise again.

Key data

• RatingDog China Manufacturing PMI51.7June data; May was 51.8; the GS forecast was 52.1 and the Bloomberg consensus expectation was 52.0.
• New Orders Index52.7May was 52.5; it rose slightly in June.
• Employment Index50.5May was 49.8; it returned above 50 in June.
• Output Index52.8May was 53.4; it declined in June.
• Supplier Delivery Times Index49.7May was 49.3; surveyed companies said delivery delays were mainly limited to the investment goods sector.
• New Export Orders Index49.4May was 49.6; it remained below 50.
• Raw Material Inventories Index50.7May was 51.7, the largest decline among the major subcomponents.
• Finished Goods Inventories Index50.2May was 50.6; it declined in June.
• Input Prices Index52.4May was 55.8, showing that cost pressures eased significantly.
• Output Prices Index52.2May was 52.0; it edged up in June and remained above 50 for a sixth consecutive month.
• Brent Crude Pricefrom above $100/bbl to below $80/bblThe report says the drop in oil prices from May to June was related to the decline in the input prices index.

Impact & implications

The implication for assets and the macro outlook is that China's manufacturing sector remains in expansion, but external demand and inventory momentum are weak, so the quality of growth needs continued monitoring. Easing cost pressures should help relieve pressure on corporate profit margins, but if demand is insufficient, price transmission and earnings recovery may still be constrained.

Risks

• The new export orders index remains below 50, indicating that external demand is still under pressure.
• The decline in the output index and inventory subindices may mean that manufacturing expansion momentum is weakening at the margin.
• There are methodological differences across PMI surveys, and the RatingDog and NBS PMIs moved in different directions, so more data are needed for confirmation.
• If oil or other commodity prices rebound, input price pressures may rise again.

What to watch

• Whether the RatingDog and NBS Manufacturing PMIs continue to stay above 50.
• Whether the new export orders index can return to expansion territory.
• Whether the output, raw material inventories, and finished goods inventories subindices continue to weaken.
• Changes in the gap between input prices and output prices, and whether cost transmission affects corporate profits.
• The impact of Brent crude price trends on manufacturing cost pressures.