BEIJING, (Reuters) – China’s factory activity slowed less in May, as COVID-19 curbs were eased. Some production was resumed. A private sector survey revealed Wednesday that this is an improvement from April’s 26-month low.

Caixin/Markit Manufacturing Purchasing managers’ Index (PMI), rose to 48.1 in Mai from 46.0 last month. This was slightly more than a Reuters poll which had 48.0.

The contraction in May was the second-sharpest since February 2020. This suggests that the recovery is still fragile.

A monthly growth and contraction is separated by the 50-point mark.

According to survey firms, the drop in output was attributed to the effects of pandemic-related restrictions and lower customer demand.

The sub-index of new orders declined for the third consecutive May, but at a slower rate. However, the gauge for export orders shrank slightly but was still in contraction for 10 consecutive months.

Some companies attributed the weakening of orders to the pandemic and increased shipping difficulties as well as Russia-Ukraine’s war.

Private survey that focuses more on coastal areas was consistent with Tuesday’s official manufacturing PMI, which increased to 49.6 in May from 47.3 in April.

Most sub-indexes of the Caixin PMI declined less due to the ease of locking down in certain regions with COVID cases dropping and the gradual reopening business activities in Shanghai.

Wang Zhe (senior economist, Caixin Insights Group), stated that the May employment gauge fell more into negative territory than other gauges. This was because employers are reluctant to hire additional staff.

“The latest round of outbreaks could have more negative consequences than those in 2020,” Wang said. Wang stated that policymakers must pay more attention to logistics and employment.

Although average delivery times for suppliers continued to increase in May, logistic disruptions did not occur as often as April.

Due to concerns about the prolonged COVID-19 restrictions as well as the conflict in Ukraine, business confidence fell to a 5-month low.

Even though policymakers are trying to rescue the weakening economy, analysts believe that the COVID-19 control measure threatens Beijing’s “around 55%” annual growth target.

The recovery of the country from the COVID wave in 2020 was helped by an increase in construction activity. However, many property developers find it difficult to finance their existing projects. Capital Economics group chief economist Neil Shearing said Tuesday that new models won’t be launched until the market has seen a significant pick-up.

Global demand for consumer goods was the backbone of the economy two years ago. However, this is slowly eroding, as spending on services increases.

The Caixin PMI is compiled by S&P Global (NYSE:) from responses to questionnaires sent to purchasing managers in China.