Chi­nese man­u­fac­tur­ing ‘re­mained weak’ in May


China’s fac­tory ac­tiv­ity re­mained sub­dued last month with both ex­port de­mand and em­ploy­ment con­tract­ing, ac­cord­ing to an of­fi­cial sur­vey Mon­day that adds pres­sure on Bei­jing for more eco­nomic stim­u­lus.

The China Fed­er­a­tion of Lo­gis- tics and Pur­chas­ing’s man­u­fac­tur­ing in­dex, which is based on a sur­vey of fac­tory pur­chas­ing man­agers, edged up to 50.2 in May from 50.1 the month be­fore.

The in­dex, based on a 100-point scale, has been hov­er­ing around the 50- mark since De­cem­ber. Num­bers be­low 50 in­di­cate con­trac­tion.

Separately, HSBC’s man­u­fac­tur­ing in­dex, which also uses a 100-point scale, showed that man­u­fac­tur­ing con­tracted for a third straight month as new ex­port busi­ness fell at the sharpest rate in two years.

HSBC’s pur­chas­ing man­agers in­dex edged up to 49.2, a tick higher than a pre­lim­i­nary read­ing of 49.1 in late May, and up from 48.9 in April.

The lat­est data on China’s out­size man­u­fac­tur­ing in­dus­try, which em­ploys many mil­lions of peo­ple, may spur pol­i­cy­mak­ers in Bei­jing to roll out more mea­sures to keep eco­nomic growth on tar­get.

“Even though the man­u­fac­tur­ing PMI for May ex­panded slightly, it’s at a his­tor­i­cally low level, and China’s man­u­fac­tur­ing in­dus­try is fac­ing rel­a­tively large down­ward pres­sure,” the fed­er­a­tion’s re­port said.

China’s econ­omy grew 7 per­cent in the Jan­uary-March pe­riod, its slow­est quar­terly pace in six years. Re­cent moves by Bei­jing to shore up growth in­clude cut­ting in­ter­est rates three times in six months and slash­ing the bank re­serve re­quire­ment ra­tio. An­a­lysts ex­pect more mea­sures if growth slows more sharply.

HSBC’s sur­vey found that pro­duc­tion con­tracted for the first time in 2015 and fac­to­ries shed jobs, let in­ven­to­ries fall and cut pur­chas­ing, all sug­gest­ing that man­u­fac­tur­ing would con­tinue to con­tract, said Annabel Fid­des, an econ­o­mist at Markit, which car­ried out the HSBC sur­vey.

“The lat­est sur­vey data there­fore sug­gest that more stim­u­lus mea­sures may be re­quired to help boost do­mes­tic de­mand and re­cover some growth mo­men­tum,” she said.

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