China's official manufacturing purchasing managers' index (PMI) returned to expansion in June, rising to 50.3. This beat market expectations and reversed May's flat reading of 50.0. A figure above 50 indicates growth.
The National Bureau of Statistics data highlights a split economy. High-tech manufacturing, fueled by strong AI-driven export demand, is performing robustly. The sector's PMI reached 53.5, indicating significant strength.
However, this strength masks underlying weakness. Domestic demand remains soft, and the property sector continues to drag on overall sentiment and consumer confidence. The non-manufacturing PMI edged up to 50.2, showing only marginal expansion.
For investors, the data points to opportunities in China's technology and equipment manufacturing sectors. Yet, the recovery remains unbalanced due to persistent issues in property and local consumption. The reading is unlikely to prompt immediate changes to the People's Bank of China's current, measured stimulus approach.