(Bloomberg) — China’s factory activity in May contracted from the previous month as both production and new orders fell, although the slowdown wasn’t as fast as in April, a private gauge showed Wednesday.

The Caixin Manufacturing Purchasing Managers’ Index rose to 48.1 last month from April’s 46 — still below 50, the dividing line that separates expansion from contraction, Caixin and S&P Global (NYSE:) said in a statement. This was much worse than what economists expected from a Bloomberg survey, which showed a marginal increase to 49.

According to the statement, total new orders decreased for the third month at a lower rate.

The data indicated that “weaker foreign demand was a key factor weighing on new business,” the statement said, as export orders continued to fall markedly, which some firms linked to difficulties in shipping items to clients.

This data comes after the publication of the official PMI this week. It also revealed a slower pace in contraction of business activity than the month before, as the country began to relax its tight lockdowns. Caixin is a survey of mainly small and private enterprises, while official manufacturing PMI mostly includes larger state-owned businesses. 

Both sets of data suggest China’s economy may start rebounding as Shanghai lifts its lockdown and as Beijing eases some restrictions, although the process of recovery may be a gradual one.

“Overall, activity in the manufacturing sector improved in May, but stayed in contractionary territory as local Covid outbreaks continued,” said Wang Zhe, senior economist at Caixin Insight Group, in a statement accompanying the data, adding that policymakers need to pay attention to “employment and logistics,” as removing obstacles in supply and industrial chains and promoting the resumption of work will help with stability and the protection of the labor market.

Beijing has announced 33 policy measures to help the economy last week and asked that local authorities take decisive action to stabilise growth.

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