China's manufacturing activity to have strengthened further

China is due to release the official manufacturing PMI for June on 1 July. 

The Markit flash manufacturing PMI released earlier showed that the output and new orders components rose strongly in June, and that the new export orders sub-component picked up on improving external demand. 

"The PMI index is expected to have continued to inch up to 50.3 from 50.2 in May, led by a rise in new orders and output", says Standard Chartered. 

However, the employment component likely remained weak, and our gauge of the inventory cycle has yet to show clear signs of restocking. The data is expected to indicate that China has started to find a footing, despite still-weak underlying momentum.

External demand may have helped at the margin. Meanwhile, domestic demand likely improved modestly on policy support. further policy support is expected from themonetary and fiscal front to boost GDP growth in H2.