China’s industrial growth hit a two-year high, according to the Caixin PMI

China’s industrial activity grew in May at the fastest pace in two years, with strong output and new orders, a private sector survey showed on Monday, indicating the sector remains robust despite supportive industrial policies.

The Caixin/S&P Global Manufacturing Purchasing Managers’ Index (PMI) rose to 51.7 in May from 51.4 the previous month, marking the fastest pace since June 2022 and beating analysts’ forecasts of 51.5 . The 50 point threshold separates growth from contraction.

The reading contrasts with an official survey on Friday that showed a surprising decline in industrial activity, pointing to a mixed manufacturing picture.

The Caixin survey is said to be more skewed towards smaller, export-oriented companies than the official PMI, which is much broader.

Production increased at the fastest pace since June 2022, with consumer segment companies reporting strong growth in May.

According to respondents, manufacturing was supported by greater inflows of new jobs, as stronger domestic and global demand supported customer interest in new products.

However, new orders from abroad grew at a much slower pace than the 41-month high recorded in April. Some interviewees said recent trade shows had led to new jobs, while others referred to their strategic expansion into foreign markets. But a lackluster global economy remains a constraint.

“It will take time to find solutions to these accumulating problems,” said Wang Zhe, senior economist at Caixin Insight Group. “Policies aimed at stabilizing the economy, reviving domestic demand and increasing employment must be strengthened and coherent.”

Sentiment among manufacturers improved compared to April, as they expected improved demand both at home and abroad.

The increase in prices of metals, plastics and energy has led to an increase in the average costs of production factors. The input inflation rate was the highest since last October.

However, employment remained weak, remaining in contraction territory for the ninth consecutive month. The rate of job losses slowed, with consumer goods manufacturers even reporting a slight increase in staffing.

China’s economy has been under pressure from a prolonged housing crisis, which has weighed on business and consumer confidence.

Source: Terra

Rose

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