May PMI indicates continued recovery of China's economy
By Lily Lyu
New numbers show that the Chinese economy continues to recover from the coronavirus-led lockdown that began in January.
The official manufacturing PMI came in at 50.6 in May. That was a slight tick-down from April but still in expansion for a third straight month. The easing of lockdowns across China allowed companies to get back to business and clear outstanding orders. Experts say the recovery is backed by a number of factors.
"Among May's figures, the new orders sub-index rose. This indicates improving domestic demand. Also, job rates were steady. The employment rate remains at a high level, higher than last year's average," said Cai Jin, vice president of the China Federation of Logistics & Purchasing. "In addition, the business confidence index picked up, showing companies' increasing confidence to grow as the economy recovers. All in all, the economy has entered a steady recovery trajectory, and the growth is well-grounded."
Meanwhile, the Caixin/Markit manufacturing PMI, which focuses on more small and medium-sized firms, also entered expansion territory, beating expectations at 50.7. It was the highest reading this year.
However, as many countries are still faced with COVID-19 restrictions including company closures, both indices pointed to new import and export orders as the biggest drag to growth.
Chen Jiahe, CIO of Novem Arcae Technologies, said the biggest draggers are things like exports, which stood at 35, significantly pulling down the overall index. The import index also stayed at a level well below the 50 mark that separates growth from contraction. "But if you look at other data, the most significant one is expectations for the future, that's recorded at 57. This means companies are confident about what's happening in the economy."
Chen said he expects a steady recovery over the next few months in international markets.