Data: The PMI for the machinery sector stood at 48.97 in June, down 0.34 points MoM and 1.10 points YoY. The seasonally-adjusted composite index stood at 48.37, up 0.18 points on the month and down 1.52 points on the year. The index for production stood at 48.94, down 0.35 points on a monthly basis and 1.71 points on a yearly basis. The index for new orders fell 0.92 points month on month and 2.61 points year on year to 47.47. The machinery sector kept 19.46 days of raw material inventories on average in June, down 0.04 day MoM. (The number of days of raw material inventories is for reference only as the survey sample may have changed.)
Summary: The prosperity of the machinery sector has not improved significantly this month, and the sector was generally in the off-season. In terms of production, the operating rate of enterprises was relatively low, and some enterprises have stopped production. New orders also continued to decline month on month, with sluggish terminal demand having a significant impact on mechanical enterprises. There were layoffs planed by some enterprises. Affected by the downturn in the sector, the procurement demand for raw materials has gradually weakened.
Survey
A medium-sized machinery enterprise in East China: The actual performance in June were subpar. It is anticipated that the performance in July will experience a further decline. The recent stimulus policies have had a limited effect on demand, with the peak season for demand generally occurring from March to May and the off-season beginning in September. The company's primary export markets are South America and Russia, with Russia's market showing a strong performance this year. Nevertheless, the domestic market has underperformed, with only one road roller sold in June. To address the current situation, we plan to reduce its workforce by 10%.
A medium-sized machinery enterprise in East China: June orders experienced a 20% month-on-month decline, influenced by the off-season and the Dragon Boat Festival. In June, logistics were smooth, ensuring smooth production and deliveries.
A medium-sized machinery enterprise in Southwest China: June orders saw a marginal month-on-month reduction, yet the overall performance is still satisfactory. Production proceeds as usual, with the forecast for July-August indicating stability or a 10-20% decline. This month's procurement remains stable, and the raw material inventory is estimated to last about two weeks.
A medium-sized machinery enterprise in North China: The work commencement rate experienced a minor decline this month, but order conditions remained steady. Export performance was lackluster, while the domestic market showed a slight improvement. This month, raw material prices rose, leading to a modest increase in inventory. As the off-season approaches, a reduction in orders of approximately 20% is anticipated.
