PMI Data Shows Fresh Signs of Recovery
China’s factory and service sector activities expanded in May amid government policies to control the novel coronavirus epidemic and coordinate growth, official data showed on May 31.
The purchasing managers’ index (PMI) for the manufacturing sector and the nonmanufacturing sector both stood above the boom-bust line of 50 in May, indicating steady recovery in major industries, National Bureau of Statistics (NBS) data showed. A reading above 50 indicates expansion.
While the manufacturing PMI eased to 50.6 in May from 50.8 in April, it still indicated an upward trend in economic growth as counter-cyclical adjustment policies gradually took effect, Wen Bin, chief analyst at China Minsheng Bank, said.
China has been walking a fine line in balancing epidemic control and economic recovery, with targeted measures introduced to help firms safely restart their businesses.
Of the surveyed manufacturing firms, 81.2 percent had resumed over 80 percent of their business operation in May, NBS data showed.
Domestic demand bounced back, with the indices measuring new orders in 12 of the 21 surveyed manufacturing industries picking up, NBS senior statistician Zhao Qinghe said.
The sub-index gauging firms’ expectations for business activities ticked up 3.9 points to 57.9, indicating improved confidence among manufacturing companies.
Data on May 31 also showed that the PMI for the non- manufacturing sector came in at 53.6 in May, up from 53.2 in April.
The sub-index for business activities in the construction sector saw accelerated pace of growth in May, expanding 1.1 points from the previous month to 60.8, while that for the service sector steadily recovered, edging up 0.2 point from April.
As China implements a more proactive fiscal policy after the annual sessions of the national legislature and political advisory body, the construction industry is expected to see sound growth momentum, Wen said.
A new path of shock-resilience and positive growth cycles will center on stabilizing employment, energizing the market, stimulating demand and achieving stable growth, according to the government work report delivered by Premier Li Keqiang at the annual national legislative session.
A more proactive and effective fiscal policy aims to reduce corporate burden by over 2.5 trillion yuan ($350 billion) this year.
Toshiyasu Iiyama, head of China Committee of Japanese financial service group Nomura Holdings, said the tax and fee cuts are expected to benefit domestic and foreign companies alike.
The government promised to ensure fair competition and make sustained efforts to create a market-oriented, law-based and internationalized business environment, a move that will improve the quality of the market economy and inject vitality into the market, Iiyama said.
China will pursue a prudent monetary policy in a more flexible and appropriate way, using a variety of tools including reserve requirement ratio cuts, interest rate reductions and relending to enable M2 money supply and aggregate financing grow at notably higher rates than last year, the work report said.
As total social financing continues to grow, the manufacturing PMI will likely stay in expansionary territory, investment bank CICC said in a research note.
52.3 53.2
53.6