China’s factory momentum holds up in June amid global upturn

Beijing: China’s official factory gauge rose, adding to evidence that the world’s second-largest economy maintained its momentum in the second quarter.

The manufacturing purchasing managers index increased to 51.7 in June, compared with a median estimate of 51 in a Bloomberg survey of economists and 51.2 in May. The non-manufacturing PMI rose to 54.9 compared to 54.5 a month earlier. Numbers higher than 50 indicate expansionary conditions; below 50 signals contraction.

Economic activity this year has proven more robust than expected, giving policy makers room to focus on reining in financial risks and cooling a frothy property sector. Firmer global trade is boosting corporate profits and hiring growth, easing fears — for now — that a correction in the house prices could derail the government’s target of 6.5% expansion in output.

Companies are assuming that curbs on excess leverage and the property sector will be transient this year, as the Communist Party won’t allow much economic pain before the leadership transition in the fall, according to a report published by research firm CBB International this week. Bloomberg