China manufacturing PMI shrinks in June as tariff headwinds persist

Published 30/06/2025, 02:42
© Reuters.

Investing.com-- China’s manufacturing sector contracted in June, albeit at a slightly less-than-expected pace as local manufacturers grappled with sluggish overseas demand amid relatively high U.S. trade tariffs. 

The manufacturing purchasing managers index read 49.7 in June, data from the National Bureau of Statistics showed on Monday. The print was slightly better than expectations of 49.6 and improved from the 49.5 seen in the prior month.

A reading below 50 indicates contraction, with China’s manufacturing sector now shrinking for a third straight month. 

Still, the PMI picked up marginally from the prior month, reflecting some improving conditions for local manufacturers after the U.S. and China agreed to slash their respective trade tariffs in May. 

Washington and Beijing were also seen agreeing to uphold the May deal, as well as establishing a framework for a trade deal in June. Further improvements in trade relations between the two countries is likely to benefit Chinese manufacturers, who will be able to sell more in U.S. markets as tariffs fall.

Dwindling U.S. demand was a major weight on China’s manufacturing sector, even as demand in the rest of the globe remained strong.

China’s non-manufacturing PMI grew at a faster pace, rising to 50.5 in June, while also surpassing expectations that it would remain steady at 50.3. Local services demand was seen picking up in May and June amid more government support, while regional holidays also helped. 

This saw China’s Composite PMI improve to 50.7 in June from 50.4 in May. 

 

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