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Chinese companies cut jobs due to economic downturn, PMI shows

A worker working at a medical device manufacturing factory in Lianyungang City, Jiangsu Province, China.

Reuters

Beijing — Chinese companies are dismissing more workers than they are hired, despite some recovery from the pandemic, official data showed on Monday.

It is based on a survey by the National Bureau of Statistics, which surveys changes in the company’s operations from the previous month and summarizes the responses into two purchasing manager indexes, one for manufacturing and one for services. It is a business.

Some of the indicators reflect whether a company will increase or decrease its workforce, with 50 as the line between expansion and contraction.

According to the Bureau of Statistics, the employment index fell below 50 in May in both the manufacturing and service industries. This shows that companies are dismissing more workers than they are hiring.

Some of the pressure on manufacturing jobs 5 consecutive holidays in early May, The surge in tourists during the same vacation period was not enough to significantly increase employment in the services sector, said Bruce Pan, head of macro and strategic research at the China Renaissance.

In the manufacturing industry, the May employment index fell to 48.9, down from 49.6 last month.

The service industry employment index rose from 48.7 in April to 48.9 in May, but was still below 50.

The one-month number isn’t considered a trend, but it raises persistent concerns about the ability of Chinese to find jobs and spend money.Retail sales growth lags behind the growth of the economy as a whole, and that figure is I missed an analyst’s expectation in April.

The latest data also point to potential weaknesses in the future economy.

Raw material prices have risen beyond the reach of manufacturers to raise selling prices. Soaring commodity prices are pushing down profit margins.

The export orders index, which is an indicator of overseas demand, plummeted from 50.4 in April to 48.3. Including demand from domestic companies, the new orders index remained above the 50 line at 51.3 in May, but fell from 52 in April.

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As the Overall Purchasing Managers Index shows, production continued to be strong and business activity grew overall. In May, the manufacturing index was 51, while the service index was 55.2. This shows the factory’s activities and the expansion of the service sector.

Nomura’s Chinese economist Tin Lu and his team said in a note on Monday that pressure on economic growth is likely to increase later this year.

Exports will weaken as expected pending demand for tourism and other consumer products subsides and developed countries resume and return to purchasing local services rather than imports. Analysts at Nomura said tightening regulations on China’s real estate market would also impact economic growth, while soaring raw material prices would curb real demand.

A similar business survey conducted by the private sector will be conducted later this week. The Caixin / Markit Manufacturing Purchasing Managers Index will be published on Tuesday, while the Service Index will be published on Thursday.

Chinese companies cut jobs due to economic downturn, PMI shows

Source link Chinese companies cut jobs due to economic downturn, PMI shows

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