Flash HSBC PMI remains in contraction

By Wang Yanlin | May 21, 2015, Thursday |

Online Edition

CHINA'S manufacturing activity may rebound in May from the lowest level in one year but it could remain contracted, a survey showed today.

The HSBC Flash China Manufacturing Purchasing Managers' Index, the earliest available indicator of China's industrial sector, landed at 49.1 in May, up from the final reading of 48.9 a month earlier, according to HSBC and research firm Markit.

It has been below the demarcation line of 50, which separates expansion from contraction, for the third straight month after a brief rebound in February.

Annabel Fiddes, an economist at Markit, said May's two-month high reading actually pointed to a further deterioration in operating conditions, with production declining for the first time so far this year.

"Soft client demand, along with further job cuts, indicated that the sector may find it difficult to expand," Fiddes said. "On a positive note, deflationary pressures remained relatively strong, with both input and output prices continuing to decline. It leaves plenty of scope for the authorities to implement further stimulus measures if required."

The central bank cut interest rates for the third time in six months last week as the authorities sought to boost the economy following a continued slowdown.

China's gross domestic product growth softened to 7 percent in the first three months, the weakest quarterly expansion in six years after it grew 7.3 percent in the final quarter of last year. The slowdown triggered China to reduce both interest rates and reserve requirement ratio in the past few months, along with other fiscal stimulus.

Economy

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Flash HSBC PMI remains in contraction

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