Hong Kong, May 31 (ANI): China's official manufacturing Purchasing Managers' Index (PMI) dropped to 48.8 this month, from 49.2 in April, according to data released by the National Bureau of Statistics on Wednesday. It was the second contraction in as many months, according to CNN Business. A reading above 50 indicates expansion, while anything below that level shows contraction.

The index, which mainly covers larger businesses and state-owned companies, was at its lowest level since December, CNN Business reported. Beijing scrapped most of its pandemic restrictions early that month, effectively ending its three-year-long zero-Covid policy.

The official non-manufacturing PMI, which measures sentiment in services and construction sectors, decreased to 54.5 in May from April's 56.4, also the weakest level in four months, CNN Business said.

"The economic recovery faces challenge[s]," Zhiwei Zhang, president and chief economist for Pinpoint Asset Management, said Wednesday. "Domestic demand weakened recently, partly due to [the] cooling property market and the second wave of Covid," he added.

The world's second-largest economy is still in the midst of a historic downturn in the property market, according to CNN Business. The country is also gearing up for a fresh wave of Covid.

Last week, Zhong Nanshan, a prominent Chinese epidemiologist, predicted that the current second wave of Covid infections would peak at the end of June with around 65 million people infected per week. According to CNN Business, doctors in Beijing have told state media that the proportion of serious complications was low, as was the hospitalisation rate.

Zhang said external demand for Chinese goods was not supportive of economic recovery, as the United States faces the risk of recession. Recent data showed that China's exports grew 8.5 per cent in April, down sharply from 14.8 per cent in March, indicating global demand was slowing.

"The sentiment in the financial market is quite bearish," he said.

According to CNN Business, Hong Kong stocks fell in response to China's manufacturing and services data. Japan's Nikkei also lost 1.4 per cent. China's Shanghai Composite Index shed 0.6 per cent whereas South Korea's Kospi, meanwhile, erased early gains and edged down 0.3 per cent. (ANI)