A leading indicator of Chinese economic activity increased at a faster pace in June, suggesting that the economic conditions may not deteriorate much further into the third quarter, according to a report from the Conference Board released late Tuesday.
However, the improvement in leading index can not be regarded as an indication of a possible recovery in the second half of the year, given the continued weakness in the index's components, according to the report.
The leading economic index, or LEI, increased 1 percent month-on-month to 263.8 in June. This followed a 0.3 percent increase in May and a 1.4 percent increase in April. Four of the six components contributed positively to the index.
"This suggests that economic conditions may not deteriorate much further in the third quarter," said Andrew Polk, Conference Board's China economist.
"Despite an overall rise in June, most underlying components of the China LEI remain weak and only half of them increased over the past six months," he added.
Polk said that this weakness in the components indicates "the broad momentum in economic activity will remain muted in the second half of the year."
The coincident economic index, which measures current economic activity, increased 0.8 percent in June to 241.8. This followed a 0.6 percent increase in May and a 0.4 percent increase in April. All five components contributed positively to the index.
Official data this week revealed that China's economy expanded 7.5 percent year-on-year in the second quarter, weaker than 7.7 percent growth in the first quarter amid weaker gains in industrial output and investment.
Data from the Ministry of Commerce showed Wednesday that China attracted $14.4 billion of foreign direct investment in June, which was 20.12 percent higher than a year earlier.
The growth rate was significantly stronger than May's 0.29 percent increase. In the first half of the year, investment grew 4.9 percent annually to $61.98 billion.
Chinese Premier Li Keqiang on Tuesday said that China must avoid sharp economic fluctuations. Li said the authorities must keep economic growth, employment and inflation within limits.
He said the government's macroeconomic policies should be more scientific, forward-looking and targeted in order to promote sustainable and healthy growth in the long run.
On Tuesday, the Asian Development Bank lowered its growth forecast for China and now expects the economy to expand 7.7 percent this year and 7.5 percent next year. The lender said the drop in trade and scaling back of investment are part of a more balanced growth path for the country.
Earlier this month, the International Monetary Fund lowered its growth forecast for the Chinese economy to 7.8 percent this year from the 8 percent predicted in April. For 2014, the growth is seen at 7.7 percent, much slower than the previous projection of 8.2 percent.
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May 22, 2026 14:46 ET Minutes of the latest Fed policy session was the highlight of the week along with survey data on the U.S. housing market. In Europe, survey data signaled the trends in the euro area private sector. Further, consumer price inflation data from the U.K. was in focus. In Asia, various economic indicators from China drew attention to the health of the economy.