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Journalism of Courage
China’s economy continued its slow recovery from the coronavirus slump in June, with a better performance in the services sector and among smaller companies tempered by the still-grim global outlook.
That’s the assessment from the earliest available indicators, which showed the economy continuing to strengthen, after a big pickup in May. The final result last month was stronger than initially seen, due to growth in the services sector, according to the purchasing manager indexes.
“Sales grew rapidly, mainly on stronger domestic demand,” according to Standard Chartered Economists Shen Lan and Ding Shuang. “Production activity picked up, with capacity usage accelerating and hiring increasing mildly.”
However, overseas orders continued to decline for those smaller companies. That confirms a trend also seen in the weak trade with South Korea in the first 20 days of the month — a leading indicator of export demand.
New export orders to smaller firms are still contracting, albeit at a slower pace, according to the Standard Chartered survey of more than 500 small firms. The index improved to 49.8 from 47.4 in April, with a number under 50 indicating a contraction.
Deflation in producer prices also slowed somewhat. If that trend continues, it could mitigate declines in company profitability.
Stocks and commodity markets rebounded over the past month after disappointment with the stimulus announced in late May at the National People’s Congress. Metal markets have been rising both on supply problems caused by the coronavirus, and rising demand in China.
Stock markets globally have risen this month, and the domestic Chinese markets also resumed their climb after dropping in late May.
