BEIJING, (Reuters) – China’s factory activity contracted in May at a slower rate, according to a Reuters poll. This is the third consecutive month of contraction. The official manufacturing Purchasing Manager’s Index, (PMI), was expected to increase to 48.6 in May after being 47.4 in April. If the reading is below 50, it means that there has been a contraction in activity over the past month. A reading above 50 would indicate expansion.

There are early signs that conditions have improved in May following a plunge in the manufacturing PMI in April, which was the weakest ever recorded, Julian EvansPritchard (an economist at Capital Economics) stated in an email.

Some manufacturers from Shanghai who had to suspend operations in April were permitted to restart production in this month. Also, measures in Shenyang and Changchun were reversed. “The lifting of intercity limitations also reduced supply chain disruptions,” said he.

Shanghai is the commercial capital of China, and it’s located right in the center of manufacturing in Yangtze River Delta. The city has been under lockdown since June 1, but the government is making gradual changes to end the prolonged shutdown. Tesla (NASDAQ: ) announced Thursday that it added a second shift to its Shanghai plant, moving towards the production of 2,600 vehicles per day.

An analyst says factories are slowly increasing production due to weak steel production growth and low power generation.

It reflects the “slow recovery in Yangtze River Delta’s supply chain dislocations post Shanghai Lockdown” and “the subdued new order given domestic consumption still at low levels and weakening global demands.” Morgan Stanley In a note, analysts from the New York Stock Exchange (NYSE:) said.

China’s economy continues to face downward pressure during the second quarter. There are problems in China’s property sector, and certain places remain locked down.

Many economists in private sectors expect the economy will shrink this quarter as a result of the 1.8% growth recorded during the first quarter. However, the government continues to insist on its zero-COVID policy.

Premier Li Keqiang announced Wednesday that China intends to achieve reasonable economic growth during the second quarter, and reduce the unemployment rate as quickly as possible.

The Tuesday release of the official PMI (which primarily focuses on state-owned and large companies) and its sister survey will focus on the services sector.

On Wednesday, the private sector Caixin manufacturing PMI will be released. This PMI focuses less on coastal areas and small businesses. Analysts predict a headline reading at 48.0, compared to 46.0 in the month before.