BEIJING: Growth in China’s June factory activity dipped to a four-month low on higher raw material costs, a shortage of semiconductors and a Covid-19 outbreak in the major export province of Guangdong, amid wider supply chain disruptions in Asia.
The chip supply crunch has hammered other manufacturing powerhouses in Asia. Industrial output in Japan and South Korea slumped in May from the previous month as auto production declined due to semiconductor shortages, adding to concerns of flagging momentum in their respective economies.
China’s June official manufacturing Purchasing Manager’s Index (PMI) eased slightly to 50.9 versus 51.0 in May, data from the National Bureau of Statistics showed on Wednesday. It, however, exceeded analysts’ forecast for a slowdown to 50.8.
It remained above the 50-point mark that separates growth from contraction on a monthly basis. The sub-index for production eased to 51.9, a four-month low, from 52.7 the previous month. Zhao Qinghe, a senior statistician at the NBS, attributed the slowdown in production to constraining factors such as a shortage of semiconductors, inadequate coal supply, a power crunch and maintenance of equipment.
A shortage of coal supply in China’s southern regions, which started in mid-May, hit factory operations though the government has said the power crunch should ease soon. New export orders fell for a second consecutive month in June and at a faster pace, likely due to the global resurgence of Covid-19 variants, forcing some countries to reimpose lockdowns.
A sub-index for raw material costs in the official PMI stood at 61.2 in June, compared with May’s 72.8, as the government cracked down on high raw material prices.