Bloomberg

Prospects for Chinese plant hold as recovery peaks

(Bloomberg) – Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our podcast A gauge of China’s manufacturing industry was little changed in May as soaring input prices weighed on on small factories, suggesting that the momentum of the economy’s recovery could The official purchasing managers index in the manufacturing sector slowed slightly to stand at 51 in May. the National Bureau of Statistics said on Monday. The non-manufacturing indicator, which measures activity in the construction and service sectors, climbed to 55.2. Readings above 50 indicate an expansion in production. The official reading for the manufacturing sector indicates a stabilization in production, as the number of working days fewer in the month compared to April could affect the results. Recent rapid increases in commodity prices are weighing on the profitability of companies, especially those purchasing commodities like metal ores or coal, while new overseas orders have fallen into contractionary territory despite the downturn. rebound and reopening in the United States. China’s economic recovery is slowing, ”said Qu Hongbin, co-director of economic research at HSBC Holdings Plc, in an interview with Bloomberg TV. “We are already past the peak of recovery momentum in China.” The small business sub-index fell from 50.8 to 48.8 in April, “reflecting small manufacturing firms that still lack momentum for sustainable growth,” Zhao Qinghe, senior statistician at the National According to economists at Bloomberg, China’s PMIs confirmed that the recovery lasts until May – but also contained new sources of concern about the economic outlook. The manufacturing PMI index showed a series of weaknesses despite the broadly stable stock, suggesting a growth plateau. The non-manufacturing sector has picked up – potentially taking over as the main driver of this stage of recovery – Chang Shu, Chief Economist for AsiaClick here for the full report An aggregate index combining eight leading indicators tracked by Bloomberg shows that economic dynamics slowed down slightly in May. Soaring commodity prices weighed on earnings as companies became more cautious and property and car sales underperformed. The manufacturers’ input price index jumped to 72.8 in the month, the highest since 2010. This indicates “higher inflationary pressure” as commodity prices The export for factories fell in contraction, falling to 48.3 in May from 50.4 the previous month, Bruce Pang, head of macro and strategic research at China Renaissance Securities Hong Kong, wrote in a report on Monday. while new orders were at 51.3. The construction sector strengthened, reversing its decline after peaking in March. A manufacturing employment sub-index was at 48.9, the same as non-manufacturing employment Click here for a breakdown of China’s PMI results Growth risks are mounting in the second half of this year, according to Lu Ting, chief China economist at Nomura Holdings Inc., who believes pent-up demand is about to abate and export dynamics will weaken as developed countries move towards consumption of more services than good. Government tightening measures will be a drag on growth, and soaring commodity prices will suppress real prices as well. asks, he said in a report Monday ahead of the data. Nomura predicts that growth will slow to 5.3% in the fourth quarter from 8.1% in the second. In addition to the easing of new orders, exporters also face the risk of higher rate volatility. exchange of the yuan, Iris Pang, chief economist of Greater Greater China at ING Bank NV, said in a note Monday. The People’s Bank of China stepped up its warnings over recent yuan gains over the weekend, after hitting a five-year high against a basket of trading partners last week. take profits on their appreciated income in yuan, or hold out longer if the dollar will weaken further, ”Pang said. The service sector has rebounded this year with further cuts in restrictions on domestic travel, releasing pent-up demand. such as an increase in travel during the May Labor Day holidays, which topped pre-pandemic levels. However, this recovery in domestic consumption is still lagging behind the recovery in the industrial sector. (Updates with comments on the yuan in the 11th and 12th paragraphs) More stories like this are available on the news source bloomberg.com. © 2021 Bloomberg LP