An official survey of manufacturers in China, released today, Friday, indicated a contraction in manufacturing activity for the third consecutive month in June, although at a slower pace. This comes as pressure increases on policymakers to take further stimulus measures to boost weak demand. According to data from the National Bureau of Statistics, the official Purchasing Managers' Index (PMI) recorded a reading of 49.0 in June compared to 48.8 in May, remaining below the 50-point mark that separates growth from contraction. The reading was in line with expectations.
Analysts have begun to lower their economic projections for China for the remainder of the year after industrial output and retail sales data for May fell short of expectations, signaling that the pandemic recovery observed in the economy during the first quarter may be losing momentum.
The yen fell to more than 145 yen against the dollar today, a level that raised concerns about potential intervention by Japanese authorities, while pressure on the yuan persisted due to the weak recovery in China. The Japanese currency hit a low of 145.07 yen to the dollar at the start of Asian trading, marking its lowest level in over seven months and heading for a quarterly loss exceeding eight percent. The renewed decline of the yen sparked speculation that Japanese authorities might intervene soon, especially since the 145 yen to the dollar level had prompted intervention to defend the currency in September.
The official manufacturing survey from China today further confirmed the contraction in manufacturing activity in June. The yuan fell in offshore trading to its lowest level since November, recording 7.2615 yuan to the dollar shortly before the start of trading today. The Australian dollar decreased by 0.12 percent to 0.6608 dollars, while the New Zealand dollar increased by 0.02 percent to 0.6070 dollars.
Data from the Chinese Ministry of Finance, released today, indicated that profits of state-owned enterprises in China grew by 10.9 percent year-on-year from January to May, totaling 1.78 trillion yuan (245.3 billion dollars). The pace of profit growth slowed down after increasing by 15.1 percent in the first four months of the year.
