China’s MNI indicator for the month of June surged, indicating rebound in business sentiments as the tailwinds of looser policy in the first two quarters of 2016 boosted sentiment.

The MNI China Business Sentiment Indicator rose 9 percent to 54.5 in June from 50.0 in May, leaving it at the highest since October 2015. The increase leaves average confidence over Q2 at 51.7, slightly better than 50.7 in Q1. However, this is not enough of an improvement to suggest that the signs of life that emerged earlier in the year have manifested into significant economic momentum.

Besides the latest outturn, sentiment has only been above the 50-point mark twice this year, although the June outturn does leave it running more than 5 percent higher than the average over the past 12 months.

Further, production declined 2 percent on the month to 54.7 while new orders managed a 0.7 percent rise to 55.0. In contrast, the interest rate companies paid, plunged, leaving the 'Interest Rates Paid Indicator' back at the historically low level reached earlier in the year at 37.9.

Furthermore, the 'Employment Indicator' fell 2.5 percent to 50.6 in June while 'Future Expectations for Employment' fell 2.2 percent to 49.5. Despite the reassessment of labor requirements, more companies felt that overall business conditions would improve in the next three months, with the 'Future Expectations' indicator up 6.8 percent to 58.3.

Meanwhile, after picking up considerably since the second half of 2015, the 'Availability of Credit' indicator fell back 3.6 percent to 50.5. Better terms of credit and a rise in the prices firms received offset the setback in Production and left the 'Financial Position' indicator up 1.8 percent at 51.3.