A Glimpse Into The Chinese Market: Industrial Activity Grows Slowly On Raw Material

Growth in China’s industrial activity slowed slightly in May as raw material prices rose at the fastest pace in more than a decade, squeezing output from small firms and exporters.

Data from the Office for National Statistics showed on Monday that the official manufacturing purchasing managers’ index fell to 51.0 in May, compared to analysts’ expectations for its stability at 51.1, unchanged from April.

The official Purchasing Managers’ Index, which focuses largely on large and state-owned companies, has held above the 50-point level separating growth for more than a year.

A sub-index of new export orders registered 48.3 in May, down from 50.4 in the previous month, falling sharply within the contraction range.

The raw materials price sub-index rose to 72.8 in May from 66.9 in April, its highest level since 2010.

The prices of primary commodities such as coal, iron ore and copper rose this year as a result of the recovery in demand after the end of measures to contain Corona and monetary easing in many countries around the world.

A sub-index of small business activity recorded 48.8 in May, down from 50.8 in the previous month.

Official data showed that companies continue to lay off workers at a faster pace.

In the services sector, activity witnessed an expansion for the fifteenth consecutive month and a faster growth pace, as the sector index rose to 55.2 from 54.9 in the previous month.

China posted a record growth of 18.3% in the first quarter of the year, but analysts expect the pace of growth to slow later in the year.