In May, the Caixin survey reported a significant increase in production output at the fastest rate since June 2022. This was driven by higher new work inflows, fueled by stronger domestic and global demand. However, new export orders grew at a slower pace compared to the previous month. Despite this, some respondents mentioned new work from trade fairs and strategic expansion into overseas markets.
To stabilize the economy and boost domestic demand, policies need to be strengthened and consistent, according to Wang Zhe from Caixin Insight Group. Factories increased their purchasing activity to meet production needs, with purchases accelerating at the fastest rate in three years. Producer sentiment improved as they expected market demand to improve both domestically and abroad. However, rising prices for metals, plastics, and energy led to an increase in average input costs, with the rate of input price inflation at its highest since last October.
Despite the overall improvement, employment remained weak for the ninth consecutive month, with job losses slowing down. Makers of consumer goods even saw a slight increase in staffing levels. The Chinese economy has been impacted by a prolonged property crisis, affecting business and consumer confidence. Overall, while there are signs of improvement in production output and consumer demand, challenges remain for sustained economic growth in China.