China’s economy showed further signs of improvement last month with a strong gain in services and construction as COVID-19 outbreaks and restrictions were gradually eased.
The official manufacturing purchasing managers’ index (PMI) rose to 50.2 from 49.6 in May, the Chinese National Bureau of Statistics (NBS) said yesterday, slightly below the median estimate of 50.5 in a survey of economists.
It was the first time since February that the index was above 50, indicating an expansion in output compared with May.
Photo: AFP
The non-manufacturing gauge, which measures activity in the construction and services sectors, climbed to 54.7, the highest in more than a year and well above the consensus forecast of 50.5.
“The Chinese economy bottomed out in June and the recovery is basically entrenched, although attention still needs to be paid to imbalances between the recoveries in supply and demand,” said the China Logistics Information Center, which publishes PMI figures in partnership with the NBS.
Government restrictions to contain COVID-19 outbreaks gradually eased over the past month. The financial hub Shanghai lifted its two-month lockdown at the start of last month by allowing more shops to reopen, more factories to resume production and for port operations to pick up.
The data suggests “the pace of recovery accelerated as the COVID-19 situation stabilized,” NatWest Group PLC chief China economist Liu Peiqian (劉培乾) said.
There was a “broad based but still soft recovery in both production and new orders,” and the figures show the rebound is still milder compared with the recovery from the Wuhan lockdown in 2020, she said.
Nineteen of the 21 sectors in the service sectors tracked in the survey returned to expansion last month, up from just six in the previous month, NBS senior statistician Zhao Qinghe (趙清河) said in a separate statement.
Gauges of sectors previously hit badly by the outbreaks all improved, such as railway transport, air transport, accommodation, catering and entertainment.
However, the recovery remains fragile as the country sticks to its “zero COVID” strategy, meaning restrictions could be tightened if outbreaks of the highly transmissible Omicron variant of SARS-CoV-2 flare up again.
Chinese President Xi Jinping (習近平) said that the policy was the most “economic and effective” for the country.
Economists are holding firm to their GDP growth forecasts for this year. Growth is projected to be 4.1 percent, well below Beijing’s annual target of about 5.5 percent.
Bloomberg’s aggregate index of eight early indicators showed some improvement last month, although the recovery remains muted.
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