China's May Manufacturing Index Surpasses Benchmark but Demand Weakness Persists

[Asia Economy Beijing=Special Correspondent Park Sun-mi] China's manufacturing indicators for May surpassed the benchmark of 50 in both government and private surveys.

On the 1st, Chinese financial information provider Caixin announced that the manufacturing Purchasing Managers' Index (PMI) for May recorded 50.7. This is an increase of 1.3 points from April's 49.4, crossing the benchmark of 50 again.

The PMI indicates an expansion phase in the economy if it exceeds the baseline of 50, and a contraction phase if it does not. The manufacturing PMI compiled and released by Caixin is mainly used as a reference to gauge the economy of Chinese export companies and small and medium-sized enterprises. The manufacturing PMI fell to an all-time low of 26.5 in February but has been gradually improving since then.

However, while production is recovering at the fastest pace since January 2011, demand remains sluggish. This is due to reduced demand for Chinese products caused by the global spread of COVID-19. Caixin pointed out, "Production recovery is faster than demand recovery," adding, "Due to the impact of COVID-19, the new orders index and new export orders index remain in the contraction zone."

Earlier released data from the National Bureau of Statistics of China also showed that the manufacturing sector is in an expansion phase in May, but demand weakness continues. The manufacturing PMI announced by the National Bureau of Statistics for May was 50.6. It was slightly lower than April's 50.8 and did not meet the market forecast of 51, but still exceeded the baseline. Among the detailed components of the manufacturing PMI, the new export orders index remained at 35.5, failing to escape a weak level.

This content was produced with the assistance of AI translation services.