New factory orders rise sharply and a gauge for export orders is at highest level since November 2020
(AF) China’s manufacturing output expanded in May at the fastest pace so far this year, as domestic and export demand strengthened.
The Caixin/Markit manufacturing purchasing managers’ index rose to 52.0 from the April figure of 51.9.
Analysts polled by Reuters had expected the index to remain at 51.9. The 50-mark separates growth from contraction.
“While output edged up on the back of still strong demand, supply shortages remain a headwind, leading to a rundown in inventories and higher prices,” Julian Evans-Pritchard, chief China economist at Capital Economics, said.
The Caixin PMI contrasted with the official index released by the National Bureau of Statistics.
That May manufacturing PMI reading stood at 51, a slight decrease of 0.1 percentage point from the previous month.
DIFFERENT COMPOSITION
Evans-Pritchard said the contradictory results stemmed from differences in the composition of the firms surveyed.
“Although both indices use the same industry weightings, the Caixin survey skews more heavily towards smaller firms and exporters,” he said.
New orders rose at the strongest pace so far this year and a gauge for export orders was the highest since November 2020.
“Rapidly rising commodity prices began to disrupt the economy as some enterprises began to hoard goods, while some others suffered raw material shortages,” Wang Zhe, a senior economist at Caixin Insight Group, said.
“Supply chains were also significantly affected,” he added.
With reporting by Reuters
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