China’s PMI at five-month high
Index pulled up by output and new orders while employment still lags behind
The preliminary Purchasing Managers Index for Chinese manufacturing in May beat expectations with a fivemonth high, suggesting the world’s second-largest economy is stabilizing.
The PMI, released by HSBC Holdings Plc and Markit Economics, was 49.7, compared with a 48.3 median estimate from analysts. April’s final reading was 48.1. Still, a reading below 50 reflects contraction. A final May reading is expected on June 3.
“Tentative signs of stabilization are emerging, partly as a result of the recent ministimulus measures and lower borrowing costs,” HSBC economist QuHongbin said.
Output and orders rebounded. The new order sub-index rose to 50.2 from 47.4 in April, the highest reading so far this year. The new export order sub-index rose to 52.7, compared with 48.9 in April, the highest since November 2010. The manufacturing output index rose to a four-month high of 50.3 in May, up from 47.9 in April.
Deinflationary pressure eased. Output prices rose for the first time sinceNovember.
“Momentum for recovery has strengthened,” Guan Qingyou, assistant dean of Minsheng Securities Research, said. He repeated his forecast that economic growth for the second quarter may stay flat with the first quarter’s 7.4 percent.
Some data worried economists. The employment subindex shrank more quickly, according to HSBC andMarkit. Qu said the jobs measure “implies that this month’s uptick in sentiment has not yet filtered through to the labor market”.
“Downside risks to growth remain, particularly as the property market continues to cool”, Qu said. “More policy easing is needed to put a floor under growth in the