(Yicai Global) June 8 -- China's economy will continue growing next month, according to chief economists.

The Yicai chief economist confidence index slid for the second straight month to 52.87 in June, still remaining above the level of 50 which separates expansion from contraction, according to a poll Yicai Global's sister publication Yicai released yesterday.

China's consumer price index is expected to have increased by 1.6 percent last month from a year earlier, accelerating its pace of rising after the 0.9 percent hike logged in April, according to the 22 survey participants.

Inflation is widening in factories. The producer price index is expected to have grown by 8.3 percent last month, higher than the 6.8 percent increase in April.

The PPI may climb to the highest level since 2009 in May, said Wang Han, chief economist at China Industrial Securities. But the recent commodity price hikes may leave little room for the PPI to surge significantly, Wang added.

Prices of international bulk commodities and domestic steel, cement, and coal continued to rise last month when comparing to the previous month.

The soaring raw material prices may affect producers' margins. Value-added industrial output at big companies is likely to have grown 8.7 percent in May, lower than the 9.8 percent surge seen in April, the survey participants added.

Retail Sales

China's retail sales of consumer goods may have jumped by 13.5 percent in May from a year earlier, down 4.2 percentage points from the increase recorded in April, according to the respondents.

Crude oil prices continued to rise last month, which is expected to boost petroleum product sales, said Lu Zhengwei, chief economist at Industrial Bank. Moreover, online sales of physical goods should rebound in the short term amid the presales of the June 18 shopping festival, Lu added.

However, the momentum of passenger cars weakened last month, which affected the performance of the whole consumer goods market to a certain extent, said Lu.

Exports

Foreign demand plays a vital role in the stability of industrial production, said Xie Yaxuan, chief macro analyst at China Merchants Securities.

New Covid-19 outbreaks overseas since April have allowed China to increase its exports of personal protective equipment, Xie said. Moreover, developed economies' rising demand for electromechanical devices has been fuelling output growth in China, the analyst added.

Consumers abroad may start using more services instead of commodities again once herd immunity for Covid-19 is reached in the US and Europe late this summer or early fall, and that can put pressure on China's exports, said Wu Ge, chief economist at Changjiang Securities.

China's customs authorities revealed new importing and exporting figures yesterday. China's trade surplus was USD45.5 billion last month, lower than the average of USD51.1 billion predicted by chief economists.

The survey participants were raising their expectations for the Chinese currency to appreciate this year. By December, the forex rate against the US dollar should be 6.43 instead of the 6.48 they had suggested late in May. By June 30, the rate should stand at 6.4.

The exchange rate of the Chinese yuan against the US dollar was 6.37 on May 31.

Editor: Emmi Laine, Xiao Yi