China’s factory and service activities picked up in June, official data showed on Thursday, fueled by the easing of Covid-19 restrictions in major cities like Shanghai and Beijing.
The non-manufacturing Purchasing Managers’ Index (PMI), a key gauge of activity in the world’s second-largest economy, defied expectations, rising to 54.7 in June after three months of sluggish performance.
It was the first time since February that the reading was above the 50-point mark separating growth from contraction, and it marked an improvement from May’s 47.8 reading.
“As the situation of domestic epidemic prevention and control continued to improve and a package of measures … to stabilize the economy was implemented more rapidly, the overall recovery of our country’s economy has accelerated,” the National Bureau of Statistics (NBS) said. . senior statistician Zhao Qinghe said in a statement.
In particular, business activity in industries badly hit by the pandemic, such as rail and air transport, picked up in June, the statement said.
Manufacturing PMI rose to 50.2 in June – in line with analysts’ expectations – from 49.6 in May.
As work resumed after the Covid lockdown, production and demand in the industry recovered and delivery times improved, according to NBS.
China is the only major economy still taking a zero-Covid approach to eliminating outbreaks as soon as they occur, using emergency lockdowns and mass testing.
As the country cuts quarantine periods for international newcomers, President Xi Jinping on Wednesday warned that China “would have faced unimaginable consequences” had it adopted a herd immunity or hands-off approach, and signaled that the government was working on its current policy will stick.
The approach has taken a harsh toll on the economy, as shops and factories have been forced to shut down and supply chains have been strained.
“It will take time for production to return to normal,” Moody’s Analytics said in a statement this week.
“Logistics remain under pressure; big ports are seeing bottlenecks and some factories are slowing production due to labor shortages.”
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