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Investing.com-- China’s manufacturing sector saw unexpected growth in June, according to private PMI data released Tuesday, driven by improved trade conditions and promotional efforts that increased new orders.
The Caixin Manufacturing PMI rose to 50.4 in June against expectations of 49.2, while rising sharply from the 48.3 seen in the prior month. A reading below 50 indicates contraction.
The data comes after a recent government PMI reading showed that Chinese manufacturing activity shrank for a third straight month in June.
The Caixin PMI focuses on smaller, private firms in southern China, unlike the official PMI, which tracks larger, state-run companies in the north. Investors watch both for a fuller view of the economy.
"In June, amid improvements in the trade environment, manufacturers made efforts to promote sales, causing total new orders to return to expansion," Wang Zhe, Senior Economist at Caixin Insight Group said in a statement.
External demand stayed sluggish, with consumer goods exports especially strained by new U.S. tariffs, leading to a third consecutive monthly decline in new export orders.
However, the improved PMI reading suggested that a U.S.-China trade deal, signed last week, provided some respite to local manufacturers.