(Yicai) June 30 -- Activity in China’s manufacturing sector climbed back into positive territory in June, after sitting on the line dividing expansion from contraction in May, supported by the rollout of policies to stabilize growth and a gradual recovery in both domestic and overseas demand.

China’s Manufacturing Purchasing Managers’ Index rose to 50.3 in June from 50 in May, according to data released by the National Bureau of Statistics today. A reading above 50 signals expansion, while one below signals contraction.

New orders picked up noticeably during the month. The new order sub-index advanced 1.3 percentage point from the previous month to 51.2, indicating stronger demand in the manufacturing sector. The new export order sub-index also edged up 1.5 percentage point to 50.1, returning to expansion territory.

Factors such as steady policy implementation, the launch of major infrastructure projects and a mild recovery in consumer demand all helped support manufacturing activity, said Wen Tao, an analyst with the China Logistics Information Center. The easing of international trade tensions in June also contributed to a steady rise in external demand, he added.

Looking ahead, Wang Qing, chief macro analyst at Golden Credit Rating International, said the near-term direction of the manufacturing PMI will depend on three main factors. The first is the sustainability of China’s export growth amid the global artificial intelligence investment boom and potential fluctuations in external trade. The second is the trajectory of the domestic real estate market and the third is the timing and strength of additional pro-growth policies that are introduced in the second half.

The non-manufacturing business activity index for June came in at 50.2 percent, while the composite PMI output index stood at 50.6 percent, both up 0.1 percentage point from the previous month, according to the data.

The continued roll-out of policies to stabilize growth and boost domestic demand, along with strengthening endogenous market momentum, will help convert potential demand in investment and consumption into real demand, said Wu Wei, an expert from the China Logistics Information Center. This will further reinforce the foundations of a steadily improving economy.

The slight rise in June’s PMI shows that positive economic factors are increasing, said Zhang Liqun, a special analyst at the China Federation of Logistics and Purchasing. However, the driving forces of economic growth are still not strong enough. Therefore, more proactive macroeconomic policies and significantly higher government investment in public goods are needed as soon as possible to further strengthen economic recovery driven by growing demand.

Editor: Kim Taylor