The strict lockdown in Shanghai has been lifted. In May it still weighed heavily on the Chinese economy.
(Photo: Reuters)
Beijing The Chinese economy did not gain momentum in May either because of the corona lockdowns. The purchasing managers’ index for service providers rose by 5.2 to 41.4 points, as the company survey by S&P Global for the media group Caixin published on Monday shows.
This means that the barometer, which has received a great deal of attention on the financial markets, has remained below the 50 mark for the third month in a row, from which point it signals growth. Service providers make up about 60 percent of the world’s second largest economy after the United States, while providing half of the city’s jobs.
The Chinese economy has been in a tailspin since the beginning of April, as the country has been struggling with the largest corona outbreaks since the pandemic began in early 2020 and has sent major cities like Shanghai into lockdown. Particularly contact-intensive sectors such as hotels and restaurants, which are considered service providers, suffer from this. As a result, companies are shedding jobs. This sub-indicator fell by 0.8 points to 48.5 points in May.
“The impact of the epidemic has hit the labor market,” said economist Wang Zhe of the Caixin Insight Group. “Companies weren’t very motivated to increase hiring.”
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The consequences are also visible in other areas. Real estate sales, for example, fell in April at their worst rate in 16 years, while industry cut back production, retail sales fell and investment growth was unexpectedly weak. At the same time, the unemployment rate rose to its highest level in more than two years.
The strict corona measures in China also have consequences for the German economy. The majority of companies affected by the shortage of materials expect the situation to worsen further, according to a survey by the Ifo Institute. “Sectors such as the automotive industry, chemicals, mechanical engineering or electrical equipment, which are closely intertwined with the Chinese economy, are hardest hit,” said Lisandra Flach, head of the Ifo Center for Foreign Trade.
More: “Like a sword of Damocles” – companies do not trust the end of the lockdown in Shanghai