BEIJING Reuters -- China's manufacturing activity increased at its fastest pace in 13 months in June, buoyed by a rebound in output, as the lifting of COVID lockdowns sent factories racing to meet recovering demand, a private sector poll showed on Friday.
The PMI of Caixin Markit Manufacturing Manufacturing managers increased to 51.7 in June, indicating the first expansion in four months, from 48.1 in the previous month. The 50 point index mark separates growth from contraction on a monthly basis.
The recovery suggested by the Caixin survey, which focused on more export-oriented and small firms in coastal regions, was more convincing than the findings in an official survey.
Economic activity has sped up in June since various COVID lockdowns have been rolled back as COVID 19 cases fell, with a range of support measures unveiled by the State Council in late May to promote growth.
A sub-index for output bounced to the highest level since November 2020, while new orders, bolstered by the first increase in export orders in about a year, fell three months of decline and posted the fastest growth in four months.
Delivery times for suppliers stabilised in June amid easing supply chain snags, after worsening for the past two years.
In spite of the strong rebound, factories remained cautious in terms of hiring more staff, with employment falling for the third month in a row.
Wang Zhe, senior economist at Caixin Insight Group, said that the recovery in the post-pandemic era remained the focus of the current economy, but its base was not strong.
The demand recovery was hampered by the deteriorating household income and expectations caused by a weak labor market. Supportive policies should be put in place for employees, gig workers and low-income groups impacted by the outbreaks. China's economy has started to chart a recovery path out of the supply shocks caused by strict lockdowns, but headwinds persist, including record high jobless rate in big cities, soft consumer spending and fear of recurring waves of infections.
Analysts expect further improvement in the third quarter, although the official GDP target of around 5.5% for this year will be hard to achieve unless the government abandons the zero-COVID strategy.
President Xi Jinping defended the zero-COVID policy on Tuesday, saying that China is willing to accept some temporary impact on economic development over harm to people's health.