China’s May manufacturing growth seen dipping only marginally
BEIJING: Growth in China’s vast manufacturing sector is expected to have dipped but only marginally in May, easing concerns of a slowdown in the world’s second-biggest economy as fears of a trade war with the United States ebbed.
The official manufacturing Purchasing Managers’ Index (PMI) is seen slipping to 51.3 in May from 51.4 in April, according to the median forecast of 30 economists in a Reuters poll. The 50-mark divides expansion from contraction on a monthly basis.
That would mark the 22 straight month of expansion for China’s manufacturing sector, and reinforce consensus views that the economy will slow only modestly this year, good news for policymakers as they try to navigate debt risks and rocky trade relations with Washington.
Last week, Washington and Beijing both claimed victory as the world’s two largest economies stepped back from the brink of a global trade war and agreed to hold further talks to boost US exports to China. US Commerce Secretary Wilbur Ross will visit China this weekend for another round of talks.
Economic data for April had painted a mixed picture for China’s economy, with investment growth slowing to a near 20-year low and growth in retail sales sliding. However, the industrial sector, a key source of jobs, remained healthy with profits growing at their fastest pace in six months, underpinned by continued strength in the steel sector.
China has been tightening controls on riskier investments, the shadow banking business and speculation in the property sector, but does not want to cut off funding to the real economy. It has cut electricity prices for industrial users by about 7% so far this year.
Separately, a private survey on China’s factory activity is forecast to show a similar easing trend, with some analysts warning that a growing number of credit defaults is pointing to mounting pressure on small and medium-sized firms, which have not benefited as much from a year-long construction boom as their larger, state-owned peers. —