- China’s business activity rebounded sharply to a ten-year-high in May, while other countries are climbing their way back up, according to IHS Markit data released on Wednesday.
- IHS Markit’s Purchasing Managers Index (PMI) showed China’s Services PMI rose to 55.0 in May, from 44.4 in April.
- The PMI is a gauge used to track the economic direction of business trends in an economy.
- While China bounced back sharply, the recovery is just beginning for most of the rest of the world, PMI surveys showed.
- The eurozone registered a reading of 31.9 in May, indicating a deep contraction, but significantly better than the 13.6 reading it saw in April.
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Purchasing Managers Index (PMI) data released on Wednesday showed signs of sharp improvement in business activity in China, suggesting that the economy is bouncing back sharply from the coronavirus-induced slump it suffered earlier in the year.
China’s General Services PMI rose to 55.0 in May, from 44.4 in April, reflecting a rise in business activity, new work, and employment at the quickest rates since late 2010. However, the pandemic continues to weigh on the country’s export orders.
The PMI is a gauge used to track the economic direction of business activity in an economy. A reading of 50 would indicate a neutral or stabilized level of growth, above 50 exhibits expansion, and below 50 means stagnation.
During economic downturns, readings as low as 45 are expected ordinarily, while during expansion PMIs tend to linger in the mid-50s range.
China's "business activity index hit its highest reading in nearly 10 years, as service providers accelerated resumption of work after the domestic Covid-19 outbreak was largely brought under control," Dr. Wang Zhe, senior economist at Caixin Insight Group, said in the release.
While China bounced back into positive territory in May, PMIs around the world showed that while most economies are still in the middle of contractions driven by the pandemic, they are all starting to bounce back from the historic lows witnessed in April.
Among a set of data released by IHS Markit on Wednesday, India's PMI came out to be the lowest.
India's Services PMI rose to 12.6 in May, from a record low of 5.4 in April, showing a slight improvement as Asia's second-largest economy slowly reopens from its lockdown.
The eurozone's composite index rose to 31.9 in May, from 13.6 in April, despite its economy facing its deepest downturn ever due to measures taken to control the Covid-19 outbreak.
Countries ranked by IHS Markit's Composite PMIs recorded for May 2020:
- China: 54.5 versus 47.6 in April
- Saudi Arabia: 48.1 versus 44.4 in April
- UAE: 46.7 versus 44.1 in April
- Egypt: 40.7 versus 29.7 in April
- Russia: 35.0 versus 13.9 in April
- Italy: 33.9 versus 10.9 in April
- South Africa: 32.5 versus 35.1 in April
- Germany: 32.3 versus 17.4 in April
- France: 32.1 versus 11.1 in April
- Eurozone: 31.9 versus 13.6 in April
- Spain: 29.2 versus 9.2 in April
- Singapore: 27.1 versus 28.1 in April
- India: 14.8 versus 7.2 in April
