Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

China’s manufacturing Purchasing Managers Index (PMI) slipped marginally to 50.6 in May from 50.8 in April. Despite the marginal dip, May PMI indicates a continued recovery of the country’s economy, according to official data.


The manufacturing sector continued to improve with 81.2pc companies operating at over 80pc capacity in May according to China’s National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing.


Large enterprises’ PMI rose by 0.5 percentage points to 51.6pc from April while the PMI of small and medium enterprises increased to 48.8pc and 50.8pc, down by 1.4 and 0.2 percentage points, respectively, from a month ago.


PMI’s sub-index for production clocked 53.2pc in May, down by 0.5 percentage points from April. The new orders index rose by 0.7 percentage points to 50.9pc from a month ago, indicating an improvement in manufacturing demand. The index for raw material dipped by 0.9 percentage points to 47.3pc from the prior month, indicating a slight drop in raw material inventory at manufacturers.


The sub-index for employment declined by 0.8 percentage points to 49.4pc from the prior month while the index for supplier delivery time rose by 0.4 percentage points to 50.5pc, indicating a slight uptick in delivery time of raw materials.

Among non-manufacturing sectors, the index for construction industry improved to 60.8pc in May, up by 1.1 percentage points from April.


China’s comprehensive PMI output remained flat at 53.4pc from a month ago, indicating a gradual increase in the production of Chinese enterprises.


On the other hand, Caixin/ Markit Manufacturing PMI rose to 50.7 in May from 49.4 in April. PMI number above 50 indicates expansion in economic activity, while a score below 50 signals contraction. The Caixin PMI reading for May is the highest since January, which is evidence of the fact that China’s manufacturing sector has regained its momentum.


China official PMI provided by NBS has inputs predominantly from large enterprises and state-owned companies, while Caixin PMI is compiled privately and includes more small and medium-sized enterprises in China.


Last week, China’s Premier Li Keqiang reiterated the government’s focus on achieving economic expansion this year despite not setting a GDP growth target for the year. This is the first time since 2002 that China has abandoned guidance on GDP. The premier emphasised protecting jobs and livelihoods at the annual National People’s Congress conference on Thursday. Keqiang said the government’s relief policies are not focused on large infrastructure projects as China’s economy is now driven by consumption. China announced CNY6.1 trillion ($853bn) stimulus package to overcome disruption caused by the COVID-19 pandemic, which is 6.1pc of China’s nominal GDP.

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