PMI hits highest level in 8 months
Great economic resilience shown amid trade tensions, analysts say
The purchasing managers index, a gauge of manufacturing that reflects business activity, rose to an eight-month high in May, highlighting the resilience of the world’s second-largest economy, analysts said.
The PMI rose to 51.9 in May, up from 51.4 in April, well above the 50-point mark that separates expansion from contraction. The index, released on Thursday by the National Bureau of Statistics, has remained in expansion territory for the 22nd straight month.
The production subindex moved up at the fastest rate in six months in May while the subindex for growth in new orders rose to an eight-month high, aided by rising commodities prices. Export orders improved from the previous month.
Zhao Qinghe, a senior NBS official, said improving exports have also driven the PMI’s uptick.
Some economists suspect that given the uncertainties caused by the ongoing ChinaUS trade and economic disputes, some exporters may have front-loaded shipments to avert risks, leading to the elevated index for new export orders, which stood at 51.2 in May, up from 50.7 in April.
The PMI’s strength “highlights resilience of the economy at a time of external threats such as trade tensions with the US”, Dariusz Kowalczyk, senior emerging-market strategist at Credit Agricole SA in Hong Kong, told Bloomberg. “Improved sentiment bodes well for activity in coming months across industries.”
The effects have surfaced from a series of measures China has taken to stabilize the economy, push supply-side structural reform, stimulate market vitality and improve the quality of economic development, said Chen Zhongtao, an analyst at the China Logistics Information Center. “Since the start of this year, the economy has shown stable growth momentum, which has laid a solid foundation for economic growth in the second half.”
“The expectations for stable and improving economic growth remain unchanged,” Cao Xunchuan, an analyst at China Fortune Securities, said in a research note.
China set a GDP growth target of around 6.5 percent for this year. In the first quarter, GDP expanded at 6.8 percent year-on-year.
On Thursday, the World Bank kept its forecast for China’s GDP growth for this year at 6.5 percent, unchanged from its last forecast in April.
The bank warned that several factors are expected to slow economic activity in the near term: a relatively tighter monetary and fiscal policy mix, moderation of growth in global trade, continuing reforms to address industrial overcapacity and environmental sustainability and measures to reduce accumulated macroeconomic vulnerabilities.