China's Factory Activity Likely Returned to Growth in June
By Reuters | 28 Jun, 2026

The world's second-largest economy struggles for growth despite strong demand for exports to feed the global AI boom, with 23 economists forecasting the purchasing managers' index (PMI) to rise to 50.1 from May's 50.0.

China's factory activity likely returned to growth in June, albeit by the slimmest of margins, as the world's second-largest economy struggles for momentum despite strong demand for high-tech exports to feed the global AI boom.

A Reuters poll of 23 economists forecast the official purchasing managers' index (PMI) would rise to 50.1 from May's 50.0, just above the 50-point threshold that separates growth from contraction. The data is due on Tuesday.

A surge in global AI investment has helped the world's top manufacturer offset the export hit many had expected from the Middle East turmoil. But signs are emerging that stockpiling linked to higher energy costs is fading, with prices rising and overseas buyers starting to run down inventories. Domestic demand, meanwhile, remains in the doldrums.

The Economist Intelligence Unit returned the highest forecast of 50.4, while Moody's Analytics responded with the lowest reading of 49.7.

"We spotted trade frontloading in June," said Xu Tianchen, senior economist at the Economist Intelligence Unit. "Exporters accelerated shipments due to U.S. trade policy uncertainty. Late July will be a big moment for them because new U.S Section 301 tariffs will kick in by then."

Separate industrial profits data released on Saturday showed upstream sectors and firms in the computer industry record sharp rises, while downstream manufacturers remained under pressure as a protracted property crisis continues to weigh on spending in the $20 trillion economy.

Meanwhile, China's central bank had instructed some commercial banks to increase their lending this month, people familiar with the matter said on Friday, the latest sign that demand for credit remains weak as the economy grapples with sluggish domestic consumption.

Strong exports helped the $20 trillion economy outperform forecasts in the first quarter, but recent data suggests growth is increasingly reliant on chips and semiconductors. The latest trade figures show shipments of automated data processing equipment jumping more than 60% year-on-year in value terms, while exports of other goods, such as furniture, rose just 1.9%.

Things are not much better on the home front, with retail sales for May falling for the first time in over three years, according to the most recent data, along with a faster slump in new home prices.

The private sector RatingDog factory activity survey is expected to fall to 51.6 from 51.8. That data is due on Wednesday.

(Reporting by Joe Cash; Polling by Pulkit Khanna and Susobhan Sarkar in Bengaluru and Jing Wang in Shanghai; Editing by Sam Holmes)