China’s Unconvincing Rebound Continues

By Glenn Dyer | More Articles by Glenn Dyer

China’s huge manufacturing sector grew at a slower pace than forecast in May, underlining an uneven rebound from the slide in the first quarter.

The official survey of activity quickened in some sectors such as construction, but was uneven elsewhere, especially in exports.

The official manufacturing Purchasing Manager’s Index eased to 50.6 in May from 50.8 in April, according to a report from the National Bureau of Statistics on Sunday. But it remained above the 50-point mark that separates expansion from contraction on a monthly basis.

The market had forecast a rise of 51.0.

It was the second monthly slowing in manufacturing though activity remains well above the record lows in February.

Export orders fell for a fifth consecutive month the sub-index standing at 35.3 in May, well below the 50-point break-even mark, as the COVID-19 pandemic continues to erode global demand.

Economists say that while much of the Chinese economy has reopened, many manufacturers are still struggling with reduced or canceled overseas orders as global demand falters.

Domestic demand also remains weak with more job losses and continuing worries about a second wave of coronavirus infections.

The sub-index for medium-sized and small enterprises fell to 48.8 and 50.8, respectively, while large companies reported a faster expansion in activity.

Reuters reported that Zhao Qinghe, an official with the NBS, said more than 80% of factories have resumed production to 80% of levels prior to the coronavirus outbreak.

However, indexes for imports and exports were at record lows as global demand continues to shrink.

In better more encouraging news the official non-manufacturing PMI edged up to 53.6 in May, from 53.2 in April, suggesting the sector’s business and consumer confidence may slowly be improving.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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