China Caixin factory sector PMI edges lower in June

A closely-tracked gauge of economic activity in China eased a tad in June, pointing to slightly slower growth in the Asian giant on the back of slower credit growth and trade tensions, economists said.

Caixin's manufacturing sector Purchasing Managers' Index slipped from a reading of 51.1 for May to 51.0 in June (consensus: 51.1).

Among the survey's various subindices, gains in the subindex tracking actual levels of output were offset by declines in others linked to new orders and purchases of raw material inputs.

A separate 'official' PMI published two days earlier had also shown some weakness, retreating from a reading of 51.9 for May to 51.5 in June.

To take note of, in June the subindices linked to export orders in both surveys fell below the 50.0 point mark simultaneously for the first time since October 2016.

That 50 point level is the threshold below which activity or a given variable is said to be shrinking at a successively quicker pace as the readings fall.

Acting as a slight offset perhaps, the official non-manufacturing PMI edged higher in June, from a reading of 54.9 to 55.0.

"On balance, the PMI readings are consistent with a slight drop back in June on the China Activity Proxy – our in-house measure of GDP growth – which accelerated earlier last quarter thanks to the easing of winter pollution controls," said Julian Evans-Pritchard, senior China economist at Capital Economics.

"We had always expected this pick-up to be temporary given the headwinds to the economy from slower credit growth and escalating trade tensions."