By Gina Lee
Investing.com – China reported better-than expected factory gate data for June on Thursday, but persistent deflation indicated that the impact from the COVID-19 virus continues to linger.
The data, which was released by the National Bureau of Statistics earlier in the day, showed a 3% decrease in the Producer Price Index (PPI) year-on-year. The drop in the PPI was smaller compared to the previous month’s drop of 3.7% and the 3.2% drop in analyst forecasts prepared by Investing.com.
Meanwhile, June’s Consumer Price Index (CPI) dropped 0.1% month-on-month, smaller than May’s 0.8% drop. But the CPI dropped 2.5% year-on-year, compared to May’s 2.4% drop.
The data gave a boost to Chinese stocks on Thursday.
The NBS said in a statement that the PPI decreased as “international commodity prices picked up, domestic manufacturing steadily recovered, and market demand continued to improve.”
Although the country’s economic recovery from COVID-19 continues, ever increasing numbers globally continues to impact global demand, pushing many factories and retailers to close.
There are over 12 million cases globally as of July 9, according to Johns Hopkins University data.
Some investors expected continued but more targeted governmental support.
“The better-than-expected PPI showed that deflationary risks at factory gates might not be so pressing, while the decline in core CPI underscores that the recovery in demand isn’t so ideal,” Betty Wang, senior economist at Australia & New Zealand Banking Group, told Bloomberg.
“Going forward, policies will remain supportive, but they’ll likely be more targeted rather than blanket.”