Early signs suggest conditions improved a bit in May, after the manufacturing PMI fell in April to the second weakest on record, Julian Evans-Pritchard, an economist at Capital Economics, said in a note.

“Some Shanghai manufacturers who had to shut down operations in April have been allowed to resume production this month. And the measures implemented in major manufacturing hubs in Changchun and Shenyang have been reversed. The lifting of long distance restrictions also mitigated supply chain disruptions,” he said. .

The Shanghai Mall, located in the heart of manufacturing in the Yangtze River Delta, is taking gradual steps to end a prolonged citywide lockdown on June 1. Tesla added a second shift at its Shanghai factory on Thursday, heading towards manufacturing 2,600 cars every day.

Analysts say factories are only slowly increasing production levels due to weak growth in steel output and falling power generation.

The relatively weak reading reflects “slow recovery from Yangtze Delta supply chain dislocations post-Shanghai lockdown” as well as “subdued new orders given still-weak domestic consumption and weakening global demand,” Morgan Stanley analysts said in a note.

China’s economy still faces downward pressure in the second quarter, with problems in the real estate sector and some places still in lockdown.

Compared to 4.8% growth in the first quarter, many private sector economists expect the economy to contract this quarter from a year earlier as the government showed no signs of relaxation of its “zero-COVID” policy.

On Wednesday, Premier Li Keqiang said China would strive to ensure reasonable economic growth in the second quarter and reduce the unemployment rate as soon as possible.

The official PMI, which largely focuses on large corporations and public companies, and its sister survey for the services sector, will be released on Tuesday.

The private-sector Caixin manufacturing PMI, which focuses more on smaller businesses and coastal regions, will be released on Wednesday. Analysts expect an overall reading of 48.0, down from 46.0 the previous month.

(Reporting by Ellen Zhang and Ryan Woo; editing by Simon Cameron-Moore)