China’s manufacturing activity sees unexpected growth in May: Caixin PMI

China’s manufacturing activity unexpectedly returned to growth in May, a private sector survey showed on Thursday, buoyed by improving production and demand, helping struggling companies that have been hit by falling profits.

The Caixin/S&P Global Industry Purchasing Managers’ Index (PMI) rose to 50.9 in May from 49.5 in April, above the 50-point mark that separates growth from contraction.

The reading beat the 49.5 expectation in a Reuters poll, a stark contrast to the deeper contraction seen in the official PMI, released on Wednesday.

China’s recovery from its tight Covid restrictions has been fragile and uneven, with April economic indicators showing falling imports, factory prices and property investment.

“We need more time to see if the improvement will be sustained, but it’s good news for the Chinese economy,” Zhou Hao, an economist at Guotai Junan International, said in a note. “More support is still needed to boost domestic demand.”

The sub-indices showed that industrial production rose at the fastest pace in 11 months, while new orders, including for exports, increased in May.

However, business confidence for the next 12 months fell to a seven-month low amid concerns over the global economic outlook.

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