China’s factory activity contracted for a second month in a row, service sector growth slowed, and there are growing signs that the world’s second-largest economy’s post-pandemic recovery is slowing.
The official manufacturing Purchasing Managers Index stood at 48.8 in May, compared with 49.2 in April, according to the National Bureau of Statistics.
The nonmanufacturing PMI, which covers industry activities such as services and construction, fell to 54.5 in May, down from 56.4 in the previous month.
Economists say manufacturing data has stayed below 50, a sign of contraction, for months, helping an economy struggling to maintain strong growth after the Chinese government eased its tough zero-corona measures this year. He said it would trigger the government to consider stimulus measures to exports are delayedbecause global demand for Chinese products has not recovered.
“Initial recovery will be led by post-reopening consumption and services, with optimism ultimately leading to a broader base of recovery, including stronger manufacturing and investment,” said Carlos Casanova, senior economist for Asia. I expected that,” he said. UBP. “That spread hasn’t happened yet.”
The weak data sent the bloc’s currencies weaker against the dollar on Wednesday, hurting struggling stock markets. already overwhelmed by worries On China’s uneven economic recovery. An index of Chinese stocks listed in Hong Kong has fallen into bear market territory.
China’s economy grew rapidly in the first quarter, but its recovery has started to slow in the past two months. real estate investment, credit, industry profits fellMeanwhile, indicators such as retail sales have fallen short of analyst expectations, casting doubt on the government’s modest full-year growth target of 5%.
“The foundation for recovery and development still needs to be strengthened,” NBS senior statistician Zhao Qinghe said in a statement on Wednesday. He said there was a “clear slowdown in production and demand” for the manufacturing sector.
Hong Kong’s Hang Seng China Enterprises Index, which tracks mainland China’s biggest companies, fell more than 2% on Wednesday, falling more than 20% below its benchmark to its recent high in January, plunged into a bear market. China’s CSI 300 index, which consists of listed stocks in Shanghai and Shenzhen, fell 1.2 percent.
The yuan fell 0.4 percent against the dollar to 7.1051 yuan, down nearly 3 percent year-to-date. Currencies of major exporters to China also sold off, with the Australian and New Zealand dollars declining 0.5% and 0.4% against the dollar respectively.
The sub-index of new export orders fell to 47.2 in May from 47.6 in April, “indicating weakness in external demand,” Goldman Sachs said in a research note. The bank said the deflationary pressure on manufacturing was “partly due to lower commodity prices and weak market demand”.
The data point to strong expansion in service industries such as aviation, shipping and road transport services, and telecommunications, but a continued downturn in real estate.
“The divergence between the service and manufacturing sectors is widening,” said UBP’s Casanova, adding that “the economic recovery is highly uneven.”
However, the demand for services built up after the end of COVID-19 measures will fade in the coming months, he said, adding that economic growth prospects for this quarter and next are “a little more complex than we thought at the beginning of 2019. would,’ he said. Year”.
Reported by William Langley, Andy Lin and Hudson Rocket in Hong Kong, Joe Leahy in Beijing and Thomas Hale in Shanghai
