The Purchasing Managers? Index fell to 52.1 from 53.9 in May, the Federation of Logistics and Purchasing said in an e-mailed statement Wednesday.

The figures indicate Premier Wen Jiabao?s government is succeeding in tempering an expansion that hit an 11.9 percent annual pace in the first quarter, which threatened to inflate consumer and asset prices. Signs of the slowdown have unsettled investors around the world because limited demand in advanced economies has left global growth reliant on emerging markets, led by China.
An output index fell to 55.8 in June from 58.2 in May, Wednesday?s report showed. A measure of new orders slid to 52.1 from 54.8 and an export-order index dropped to 51.7 from 53.8. A measure of input prices decreased to 51.3 from 58.9, the biggest fall in the 11 sub-indexes.

The manufacturing index, released by the logistics federation and the Beijing-based National Bureau of Statistics, covers more than 730 companies in 20 industries, including energy, metallurgy, textiles, automobiles and electronics.

Economic growth is moderating, a rebound in exports is weakening, and slower domestic demand is leading to a build-up of finished-goods inventories, the federation said in a separate statement on its website. Industrial production is entering a ?light season? and the output of heavy energy users such as metal and oil processers contracted last month, the federation said.

Source : Konaxis

Some estimates suggest factories need two million more migrant workers from other parts of China.

The shortages have been highlighted in Chinese media as the country gets back to work after the week-long Spring Festival, or Lunar New Year holiday.

Expectations of higher wages and better working conditions from new workers are being blamed for the labour shortage.

Low pay is a major factor. The companies that find it hardest to recruit, and then retain workers, are those involved in low value, labour intensive manufacturing.

Since last year many Chinese migrant workers found work that paid similar salaries closer to home, working on the infrastructure projects funded by the country’s economic stimulus package.

Beijing’s own research suggests that each new generation of workers is better educated, and has higher expectations in terms of salary, labour conditions and rights than those that came before them.

Source : Konaxis

Last month?s PMI was also the highest level since April last year, when the official PMI reached 59.2, investment bank Goldman Sachs said in a note, quoting official data.

It sank to a record low of 38.8 in November due to the global financial crisis, but has improved continuously in the five months since, although it only moved above 50 in March.

This “sends a clear signal that real economic activity growth has been improving on a sequential basis from its trough last November,” Goldman Sachs said.

A reading of above 50 suggests expansion, while one below 50 indicates contraction.

The PMI is a composite of a package of indices that measure economic performance. The survey, jointly conducted by the National Bureau of Statistics (NBS), covers purchasing and supply managers of more than 700 manufacturers across China.

All the April indices, except those measuring finished product inventory, raw materials inventory and suppliers’ delivery time, rose with most up by less than 2 percentage points.

Indices measuring output and new orders rose by 0.5 and 2.0 percentage points to remain above 50 percent for a third straight month.

The purchasing price index was up 3.0 percentage points to 51.3percent, the first time it was above 50 percent since September last year.

The employment index also surpassed 50 percent fir the first time since October last year, as it rose 1.7 percentage points to 50.3 percent.

“The continuous rebound of the PMI shows Chinese economy is on track for recovery. The first-quarter investment, consumption and export figures also reflected this trend.” said Zhang Liqun, a researcher with the Development Research Center of the State Council.

Manufacturing accounts for more than 40 percent of China?s economy, which has been hit hard by the big drop in demand for its products in key export markets such as the United States and Europe.

Source : Konaxis