Financial News: China Manufacturing Logs Fastest Growth In Nearly 2

China Manufacturing Logs Fastest Growth In Nearly 2 Years

06/03/2024 - 02:53:00 (RTTNews)

(RTTNews) - China's manufacturing sector logged the fastest growth in nearly two years in May as production growth accelerated amid rising new orders, survey results from S&P Global showed on Monday.

The Caixin manufacturing Purchasing Managers' Index rose more-than-expected to 51.7 in May from 51.4 in the previous month. The reading was seen at 51.6.

The manufacturing sector expanded for the seventh straight month and also marked the strongest expansion in 23 months.

Output grew the most since June 2022, with firms in the consumer segment posting sharp output growth. Stronger demand from domestic and foreign markets helped to boost new orders.

Purchasing activity of manufacturers grew as they sought to acquire more inputs to fulfill production needs and in anticipation of output growth. As a result, stocks of purchases increased with the intent for safety stock building.

However, stocks of finished goods returned to contraction, though this was attributed to faster outbound shipments for the fulfillment of orders. Further, lead times for the delivery of inputs shortened for the third straight month.

Meanwhile, backlog of work accumulated at the fastest pace since September 2021 amid rising new work inflows, the survey showed.

Employment continued to decline. The labor market remained in contraction zone for the ninth consecutive month.

On the price front, average input costs continued to increase due to rising metals, plastics and energy costs. The rate of input price inflation was the highest since last October.

Average output prices were little changed in May. Some firms were keen to share their rising cost burdens, while others continued to suppress charges to remain competitive.

Finally, sentiment among Chinese manufacturers remained positive with panelist expressing hopes that market demand can improve both locally and abroad.

Currently, China's economy is generally stable and remains on the road to recovery, Caixin Insight Group senior economist Wang Zhe said.

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