China May factory activity slips marginally amid signs of rebound in domestic demands

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China May factory activity slips marginally amid signs of rebound in domestic demands

China’s National Bureau of Statistics data revealed earlier on Sunday had signalled an uneven recovery of the Chinese economy despite a faltering of factory activity in May, as the slide in manufacturing activity appeared to be marginal and the world’s second-largest economy’s services and construction sectors had gathered pace in May, suggesting a quicker-than-anticipated economic recovery, but a ludicrous lag in global demands had kept a lid on China’s economic recovery, suggested analysts.

Besides, although China’s manufacturing activity had slowed down for the second consecutive month in a row in May, the activities had witnessed a sharp rebound from a record lows in February, when the Chinese economy was close to a complete stagnation due to the pandemic-led lockdown measures.

China May Factory activity falters marginally; impact eased on rebound in domestic demands

On top of that, according to China’s National Bureau of Statistics data released earlier on Sunday, the official manufacturing PMI (Purchasing Managers’ Index) data had slightly faltered to 50.6 in May from a reading of 50.8 in April, nonetheless, a Wall St.

analysts’ poll was expecting a reading of 51. Apart from that, the PMI data for small- and medium-scale businesses in China fell to a reading of 48.8 and 50.8 respectively last month, however gains of the larger companies had offset the losses.

Concomitantly, as another encouraging sign for a healing Chinese economy, the PMI sub-index for the forward-looking total new orders had shown an improvement to 50.9 in May from a figure of 50.2 a month earlier, meaning that the domestic demands would witness an uptick sooner-than-expected.

Meanwhile, citing optimism over China’s domestic demand which would likely to rebound over the coming months, analysts with the investment bank CICC wrote in a client note followed by the release of China’s National Bureau of Statistics data, “In the near term, we expect monetary policy to continue the ‘volume’ of credit expansion in order to stabilise growth and help fiscal expansion. In this regard, China’s domestic demand will likely continue to rebound.