An indicator of Chinese manufacturing activity beat forecasts in June but analysts warned that Friday's surprising result belied a slowdown in the world's second-largest economy.
The manufacturing purchasing managers’ index publish by the National Bureau of Statistics came in at 51.7 for June, up from May’s level of 51.2 and remaining above the 50-point level separating expansion from contraction. A median forecast from economists surveyed by Bloomberg predicted a fall to 51.
In the first three months of the year China's economy expanded by a better-than-expected 6.9 percent, but ANZ expects growth to slow to 6.7 percent in April-June. The slowdown is part of a longer-term trend as China transitions from an investment and export-driven economic model to one more reliant on consumer spending.
But the retooling has been complicated as Beijing wrestles with huge debt and excess capacity left over from massive government-backed infrastructure spending at the height of the global financial crisis.
Prices for raw materials fell in April from the previous month, pressured by fears that domestic demand will not be strong enough to absorb surging factory output that rose the most in more than two years in March.
A renaissance in China's steel industry has been a major driver of the world's second-largest economy in recent quarters, helping generate the strongest profit growth in years and adding to a reflationary pulse across the global manufacturing sector.