A carefully assessed assessment of the private sector in Chinese production showed that the sector experienced its third consecutive monthly decline in May, but the rate of contraction slowed compared to the previous month.
The Caixin China General Manufacturing Purchasing Managers’ Index rose to 48.1 in May from 46 in April, but still below the 50-point threshold that separates the contraction from the expansion. The reading was largely in line with economists’ expectations.
The slowdown in contraction rates was helped by lower production and new orders than in April, suggesting that supply and demand pressures are easing.
China’s economy was hit in May by severe blockades to combat Covid-19, including in Beijing and Shanghai, prompting Prime Minister Li Keqiang to issue a stern warning that the country could struggle after positive economic growth this quarter.
Caixin’s PMI found that the time it took for goods to reach producers had continued to extend “noticeably” as Covid’s travel restrictions weighed heavily on the country’s logistics network. Business confidence for next year fell to a five-month low, as fears about the virus and the war in Ukraine weighed on the mood.
On Tuesday, the official index of manufacturing activity, which places more emphasis on larger state-owned enterprises and tends to reflect a more optimistic note, reached 49.6.
Wang Zhe, a senior economist at Caixin Insight Group, said Covid epidemics continued to dampen the economy in May and that the negative effects of recent waves could outweigh those of 2020, when the pandemic began.
“Politicians need to pay attention to employment and logistics. “Removing barriers to supply and industrial chains and encouraging the resumption of work and production will help stabilize market players and protect the labor market,” Wang said.
Add Comment