China’s Economy Flashes Hints of Weakness

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BEIJING—Expansion in China’s factory sector slowed in June, as export demand weakened while supply bottlenecks held back production, official data showed Wednesday.

Equally worrying, China’s services sector, a persistent laggard in the country’s post-pandemic rebound that Beijing policy makers are eager to see drive more of the economy, softened as recent coronavirus outbreaks again hindered consumer spending.

The hints of weakness on both fronts come as economists lowered expectations for growth in the world’s second-largest economy. In recent weeks, Morgan Stanley and Barclays, among others, have downgraded their forecasts for China’s full-year gross domestic product to below 9%, citing the impact of higher raw material prices on production and weaker-than-expected consumption.

On Wednesday, China’s National Bureau of Statistics said its official manufacturing purchasing managers index fell slightly to 50.9 in June, from 51.0 in May.

The gauge was higher than the 50.7 median forecast expected by economists polled by The Wall Street Journal and remained above the 50 mark that separates expansion from contraction for a 16th straight month. But it marked the lowest reading in four months.

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