An indicator of Chinese manufacturing observed close to the private sector showed that the sector experienced a third consecutive monthly decline in May, but the pace of contraction slowed compared to the previous month.
Caixin China General Manufacturing’s purchasing managers’ index rose to 48.1 in May from April 46, but still below the 50-point threshold separating contraction from expansion. The reading was in line with economists’ expectations.
The slowdown in the contraction rate was helped by a lower reduction in manufacturing output and new orders compared to April, suggesting that pressure on supply and demand was weakening.
China’s economy was hit in May by tight blockades to fight Covid-19, including in Beijing and Shanghai, prompting Premier Li Keqiang to issue a strong warning that the country could be in trouble. after positive economic growth this quarter.
Caixin’s PMI found that the time for goods to reach manufacturers had continued to lengthen “markedly” as Covid’s travel restrictions weighed on the country’s logistics network. Business confidence over the following year fell to a five-month low as concerns about the virus and the war in Ukraine weighed on sentiment.
On Tuesday, an official indicator of manufacturing activity, which places more emphasis on larger state-owned enterprises and tends to have a more optimistic note, stood at 49.6.
Wang Zhe, a senior economist at Caixin Insight Group, said Covid’s outbreaks had continued to limit the economy in May and that the negative impacts of the latest waves could outweigh those of 2020, when the pandemic began.
“Policy makers need to pay attention to employment and logistics. Removing barriers to supply and industrial chains and promoting the resumption of labor and production will help stabilize market entities and protect the labor market, “Wang said.