Factory activity in China last month expanded at a slower pace as the country attempts to get back on track after COVID-19 shutdowns, official data showed yesterday, with the global economic slump making the sector’s recovery difficult.
China’s factories have stirred back to life after the lifting of strict lockdown measures imposed after the virus surfaced in the central city of Wuhan, but its spread worldwide has dragged down key foreign markets, weighing heavily on Chinese exports.
The purchasing managers’ index (PMI), a key gauge of activity in China’s factories, was 50.6 last month, above the 50-point mark separating growth from contraction.
Photo: Reuters
However, the figure was down slightly from 50.8 the month before, and 52.0 in March, the Chinese National Bureau of Statistics said.
Bureau senior statistician Zhao Qinghe (趙清河) pointed to weakness in China’s imports and exports, saying that “the epidemic situation and economic situation globally remain severe and complex, and foreign market demand is still shrinking.”
Indices on new export orders and imports remained relatively low, Zhao said.
The “momentum of economic recovery is steady and improving,” but there is weakness in some industries such as textiles and apparel, he said.
Non-manufacturing PMI was at 53.6 last month, a slight increase from the month before, with the bureau flagging that the construction and service industries were showing signs of recovery.
Business activity in the cultural, sports and entertainment industry remains low, with many entertainment venues still closed amid fears of a second wave of COVID-19 infections.
Economists flagged concerns over employment, with United Overseas Bank Ltd (大華銀行) head of research Suan Teck Kin (全德健) saying that the employment index for manufacturing and services were below 50.
There is a “need to watch on that, especially with China’s official job creation number adjusted downward quite significantly this year,” Suan said.
Chinese Premier Li Keqiang’s (李克強) annual work report this year at China’s National People’s Congress made stabilizing employment a top priority, targeting new urban employment of more than 9 million — a drop from 11 million targeted last year — following the pandemic.
ING Bank NV chief economist for Greater China Iris Pang (彭藹嬈) told reporters that the above-50 figure last month suggested “there was some domestic demand pick-up” compensating for weak markets overseas.
Policymakers have long sought to wean China off cheap exports and government spending in favor of domestic consumption, although it is unclear if this will yield results.
However, Pang, too, said employment could pose a problem, with a potential trickle-down effect on spending and local demand if job losses grew and domestic sectors could not provide sufficient work for people laid off.
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