China's Factories Seen Extending Activity Declines in June: Reuters Poll

• China's manufacturing activity likely contracted for a second month in June, a Reuters poll showed on Thursday. This has led to renewed calls for fresh stimulus after a string of recent indicators showed the economy struggling to get back on its feet.
• The official purchasing managers' index (PMI) was forecast at 49.5, unchanged from April, according to the median forecast of 19 economists in the poll. The 50-point mark separates growth from contraction in activity.
• All the while, a protracted property crisis continues to drag on domestic demand. Retail sales last month beat forecasts, but were aided by a five-day public holiday boost, while public sector investment grew just 0.1% in the January-May period, reflecting weak consumer and investor confidence.
• Policy support and strong exports should help China’s $18.6Tn economy grow 5.5% this year, said Julian Evans-Pritchard, head of China Economics at Capital Economics. However, he was "less sanguine about the medium-term outlook." Officials are under pressure to fire up new growth engines to reduce the economy's reliance on property, an objective analysts say may be incompatible with keeping growth steady at around 5%, which is the target for this year.
• Chinese Premier Li Qiang on Tuesday told delegates at a World Economic Forum meeting in the northeastern city of Dalian the rapid growth of new industries has strongly sustained healthy economic development. "Since the beginning of this year, China's economy has maintained an upward trend...and is expected to continue to improve steadily over the second quarter," Li added.

(Source: Reuters)