China's manufacturing PMI Photo: Xinhua

The Caixin/Markit manufacturing Purchasing Managers Index (PMI), a gauge of activity in China's manufacturing sector, returned to expansion territory at 50.7 in May, reflecting an accelerated recovery in economic activity.

The index was up 1.3 points from April to the highest level since February.

The Caixin index trend is contradictory to the official manufacturing PMI released on Sunday, which showed a month-on-month drop of 0.2 points to 50.6.

According to Caixin, the recovery of manufacturing has been faster than that of demand. The new export orders index has been in contraction territory for five consecutive months as many countries have imposed strict lockdowns and suspended business activity.

The price of raw materials has remained in the contraction zone for four straight months, with some factories saying price drops for materials like metal and oil have driven down costs.

Many of the companies polled said they had cut workers due to insufficient market demand. The survey showed domestic companies reported their first product backlog drops since February 2016.

However, some domestic economists remain upbeat about China's economic growth prospects in the wake of the COVID-19 epidemic, saying the economic rebound will continue and could be more evident from June.

Li Xunlei, chief economist at the Shanghai-based Qilu Asset Management, said in an article posted on his public WeChat account on Monday that China's GDP growth rate may reach about 9 percent in the first quarter of 2021, and GDP will resume growth starting in the second quarter of 2020.

Hua Changchun, chief economist at Guotai Junan Securities, estimated that the country's fiscal stimulus would reach 10.8 trillion yuan ($1.514 trillion) this year, which is expected to drive the country's GDP growth to between 2 and 3 percent.


Newspaper headline: Caixin manufacturing PMI expands in May, highest since February