May data shows the Services sector still leading the pack, with another high month-on-month jump in the Sales Growth Index, continuing high business confidence in the near future, and a 17 month high reading for the Index of Market growth.

Manufacturing is showing a somewhat slower recovery, as might be expected, but is not so far behind, with the Sales Growth Index again registering an increased margin over the 50 "no change" level. Even the Manufacturing Staffing Index, so long signalling a reluctance to expand employment, is now in positive territory, and Business Confidence continued its long slow upward movement in May.

Overall the Chinese economy looks set to resume the rapid economic growth it has enjoyed for most of the last four decades, although given the prospects for global growth in a world grown somewhat more suspicious of international trade, the absolute rate of growth it can achieve remains to be seen.

The data suggests there is little doubt that the Chinese economy isn't yet back to pre Covid normality, but both Manufacturing and Services sectors are experiencing rising activity levels. Although it is early days to be sure of the precise prospects for the second quarter of 2023, the May data does provide evidence that China is recovering from Covid rather faster than expected by many analysts.

In conclusion, the rapid changes made in Covid policy from early December by the Chinese Government do appear to be releasing a wave of long suppressed energy, despite the rather different international situation , and continuing supply problems associated with the long lock down period.

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