China factory activity declines further in May

31 May 2023 12:23pm
Image for illustrative purposes only. (Photo by AFP) / China OUT
Image for illustrative purposes only. (Photo by AFP) / China OUT

BEIJING, China - China's manufacturing activity shrank in May for the second successive month, official figures showed Wednesday, the latest sign that the country's economic recovery is losing steam.

The official manufacturing purchasing managers' index (PMI) - a key measure of factory output - fell to 48.8 this month, below the 50-point mark that separates expansion and contraction, according to the National Bureau of Statistics (NBS).

The figure followed an unexpected fall to 49.2 in April, which reversed three consecutive months of growth. It was lower than the median estimate of 49.5 in a Bloomberg survey of economists.

The drop "indicates the economic recovery faces challenges", said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.

They include a cooling property market and a burgeoning second wave of Covid-19 that has weakened domestic demand, Zhang said.

But there is "no sign of imminent policy response", he said, adding the government "may continue to take a 'wait-and-see' stance for now".

China's economy expanded 4.5 per cent in the first quarter of the year as the country rapidly reopened after ditching years of strict health controls that hammered businesses and international supply chains.

But a host of other headaches are bedevilling the world's second-largest economy, including its debt-laden property sector, limp consumer confidence and the risk of recession elsewhere.

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The country is also grappling with a new Covid-19 outbreak, but official data on the scale of it is scarce and there is little sign that containment policies will be reimposed.

Senior health adviser Zhong Nanshan said the current wave may peak at around 65 million infections per week by the end of June, state-backed Shanghai media outlet The Paper reported last week. - AFP