China’s manufacturing sector to face headwinds in next phase of post-lockdown recovery - IHS Markit

Yating Xu, Senior Economist at IHS Markit, said in his latest report, the further expansion in China’s manufacturing and industrial orders will be an uphill task, in absence of stronger broad-based demand and exports.

Key takeaways

“Orders for infrastructure materials and equipment have helped industrial output recover faster in China than most places emerging from COVID-19 lockdowns

China’s factory-gate prices, still in deflation territory this year, may have turned positive on a monthly basis in June.

The industrial recovery is expected to help China’s economy post a positive growth rate in the second quarter after contracting for the first time in decades due to COVID-19.

But analysts warn that factories could struggle to keep up momentum even as early as this quarter as pent-up demand wanes, exports struggle and heavy floods take their toll on industries and businesses in the Yangtze Delta.

Global demand may be unable to recover to pre-COVID levels in the next three years.”