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China's manufacturing activity deteriorates in May: HSBC

Source: Xinhua | June 1, 2015, Monday | Online Edition

China's manufacturing activity continued to deteriorate in May, a private survey showed on Monday, suggesting continued downward pressure on the world's second-largest economy.

The HSBC/Markit purchasing managers' index (PMI) for China's manufacturing sector last month stood at 49.2, level with the market forecast and higher than the preliminary reading of 49.1.

The HSBC China manufacturing PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in more than 420 manufacturing companies.

An official survey, which focused more on medium and larger-sized companies, showed China's manufacturing PMI stood at 50.2 in May, up from 50.1 in April.

A reading above 50 indicates expansion, while anything below that represents contraction.

Companies signaled a renewed contraction of output as total new business fell for the third month running.

Data suggested that weaker demand overseas was a key factor behind the latest fall in new business, as new export work declined at the steepest rate since June 2013.

Meanwhile, deflationary pressures in the sector eased, with both input and output prices recording the slowest rates of deflation since August 2014.

"The headline PMI signaled a further deterioration in the health of China's manufacturing sector in May. A solid fall in new export work contributed to fewer new orders, which in turn led to the first contraction of output in 2015 so far," said Annabel Fiddes, an economist with Markit.

Fiddes said she expects the manufacturing sector to remain in contraction territory for some time and more stimulus measures to be rolled out to help boost domestic demand and recover some growth momentum.

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