Two surveys have suggested that China’s manufacturing sector improved or at least stabilized this month compared with the previous month, providing some respite following signs of a slowdown in the economy’s recovery.
China Beige Book, a US-based data provider, said its surveys showed that manufacturing output increased “notably” from last month, as did domestic and foreign orders.
Separately, Goldman Sachs Group Inc cited a pick up in the emerging industries purchasing managers’ index (PMI).
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“It’s still too early to put a nail in the coffin of the post-COVID Zero recovery,” China Beige Book said in a statement. “Manufacturing activity defied rumors of demise, though soft demand from Western economies remains a major headwind.”
Revenue and profit margins for Chinese manufacturers as well as the service and retail sectors also increased this month from the previous month, it said.
China Beige Book’s data was based on a survey of about 1,000 Chinese firms conducted between May 18 and Thursday last week.
Morgan Stanley chief China economist Robin Xing (邢自強) remained optimistic about China’s growth trajectory for the year despite the softer data last month.
“I would see recent April data weakness as a hiccup,” he said in an interview with Bloomberg TV, adding that the strength in services spending limited any need for additional stimulus.
“As we have witnessed in other Asian economies who didn’t use paychecks or fiscal transfers to jump-start the recovery, the recovery takes time because you need the service sector to recreate jobs,” he said.
China’s emerging industries PMI, which measures month-on-month changes in activity in sectors such as renewable energy, advanced manufacturing and biotechnology, showed an uptick this month compared with the previous month after seasonal adjustment, Goldman Sachs’s China economist Hui Shan (閃輝) said in a note.
The emerging industries PMI is widely seen as a leading indicator of China’s official manufacturing PMI, and the figures suggest “a tentative sign that manufacturing activity may begin to stabilize,” Hui added.
The official PMI is set to be released today.
The housing market remains a concern, with the China Beige Book survey finding weakness in the sector.
“Construction is continuing to struggle,” Shehzad Qazi, managing director of the survey company said in an interview on Bloomberg Radio. “The property market recovery remains incredibly uneven. Price growth rebounded from April, but sales slowed.”
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