China's Manufacturing PMI Dips in May as External Demand Contracts

China’s Manufacturing PMI Dips in May as External Demand Contracts

Posted Monday, June 1, 2020 by
Arslan Butt • 1 min read

Factory activity across China registered a slower rate of growth than the services and construction sectors during May even as the country emerged from lockdown and business activity returned to normal levels of operations. China’s official manufacturing PMI dipped slightly from 50.8 in April to 50.6 in May, but remained just above the 50-threshold indicating expansion.

However, the future beat economists’ forecast which was for a reading of 51. The growth in the manufacturing sector slowed down on account of a fifth consecutive month of contraction seen in export orders, with external demand falling as the world continues to be affected by the pandemic.

Employment also registered a slight dip, with factories cutting down their workforce as a result of weak demand. On a positive note, however, new orders grew at a faster pace in May than in April, a sign indicating improvement in domestic demand.

An official at the NBS has confirmed that since the lockdown restrictions were lifted back in April, over 80% of factories across China are now operating at up to 80% of the pre-coronavirus levels. However, the sector faces strain as external demand is expected to continue remaining weak for the foreseeable future. Domestic demand too hasn’t returned to pre-pandemic levels as consumers worry about job losses and the second wave of outbreak.

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