China Manufacturing Sector Growth Improves In May
01 June 2021 - 10:15AM
RTTF2
China's manufacturing sector expanded at a faster pace in May on
robust new orders and production, data published by IHS Markit
showed on Tuesday.
The Caixin manufacturing Purchasing Managers' Index rose to 52.0
in May from 51.9 in April. The reading was expected to remain
unchanged at 51.9.
Although mild, the upturn was the strongest recorded in the year
to date. A score above 50 indicates expansion in the sector.
Total sales grew the most in five months, supported by greater
demand both at home and overseas. New export order growth improved
to a six-month high in May.
Production increased in May but the pace of growth softened due
to the material shortage and higher purchasing costs.
Employment was broadly unchanged in May. While some firms added
to their payrolls in order to expand capacity, other companies
expressed a more cautious approach to hiring.
Average cost burdens rose rapidly in the latest survey period,
with the rate of inflation the quickest since December 2016. Firms
generally passed on greater input costs to clients by raising their
output prices which increased at the fastest rate since February
2011.
Manufacturing firms remained confident that output would
increase over the year ahead amid forecasts of rising customer
demand and new product releases. However, the level positive
sentiment dipped to a four-month low amid rising costs and
pandemic-related uncertainty.
To sum up, manufacturing expanded in May as the post-epidemic
economic recovery kept its momentum, Wang Zhe, a senior economist
at Caixin Insight Group said.
Inflationary pressure would limit the room for monetary policy
maneuvers, Wang noted. The price transmission effect emerged as
manufacturing output prices surged last month. Rapidly rising
commodity prices began to disrupt the economy as some enterprises
began to hoard goods, while some others suffered raw material
shortages.
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