Business Maverick: China factory activity gradually improves as lockdowns ease

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China’s factories still struggled in May, but the slower pace of contraction suggests that the worst of the current economic fallout may be coming to an end as the country starts to ease up on its tough lockdowns.

The official manufacturing purchasing managers index rose to 49.6 from 47.4 in April, according to data released by the National Bureau of Statistics on Tuesday. A reading below 50 still indicates a contraction, but the gauge was better than the median estimate of 49 in a Bloomberg survey of economists.

The main sub-indexes rebounded in May from April, with the sharpest improvements seen in suppliers’ delivery times and new orders — though those sub-gauges remained in contraction. The index measuring the delivery time of suppliers rose to 44.1 from 37.2, suggesting that it’s taking less time for raw materials to reach their manufacturing customers.

China’s benchmark CSI 300 Index added 1.1% as of the mid-day break, leading stock gains in Asia, with information technology and consumer staples the main gainers. The yield on China’s 10-year government bonds climbed 2 basis points to 2.79% as of 11:34 a.m. local time.The outlook for China’s economy has darkened this year amid widespread Covid outbreaks and stringent controls to curb infections.

 

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