The National Bureau of Statistics of China (NBS) reported that the manufacturing Purchasing Managers’ activity index remained unchanged last month. The fact that the index stayed below 49.4 points in June is a worrisome signal for analysts. The PMI reading below 50 mark indicates contraction of the activity in the sector while the reading above this mark is a sign of expansion. China’s manufacturing PMI has been in the contraction zone for two months in a row. 

According to Trading Economics, the consensus forecast suggested an increase in the PMI reading to 49.5 points in June, but the actual result came short of expectations. Last month, the index measuring business activity in large enterprises declined to 49.9 points from 50.3 points, PMI for middle-size companies advanced to 49.1 points from 48.8 points while the PMI reading for small businesses rose to 48.3 points from 47.8 points. 

Further on, the sub-index of new orders slipped to 49.6 points in June from 49.8 points in May. At the same time, the employment index slid to 46.9 points from the previous level of 47 points. The gauge for export orders fell to 46.3 points from 46.5 points. 

According to the National Bureau of Statistics, the construction and services PMI also inched down to 54.2 points in June from the previous reading of 54.3 points. The Caixin/Markit manufacturing PMI moved below 50 mark for the first time in the past four months. It came in at 49.4 points in June versus 50.2 points in May. 

The manufacturing PMI is composed based on the survey of three thousand companies from 31 industrial sectors. Meanwhile, the services PMI is calculated on the basis of answers from four thousand companies from 37 sectors.