Higher PMI reading lifts hopes of reversing China's first-quarter slowdown
Mainland manufacturing output unexpectedly rose in May, suggesting a slowdown in economic growth in the first quarter may be stabilising.
The official Purchasing Managers' Index (PMI) rose to 50.8 from 50.6 in April, the National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday. That was higher than all estimates in a Bloomberg survey of 30 analysts and above the median projection of 50, which divides growth from contraction.
The report may offer some comfort to policymakers after the preliminary reading of a private manufacturing survey released on May 23 pointed to the first contraction in seven months. Premier Li Keqiang said last week measures to reform the economy will be accompanied by slowing growth and warned last month that new stimulus would create risks.
"Given the mixed signals, I'd wait for the full set of activity data such as industrial … and electricity production to judge the momentum of the economy," said Zhang Zhiwei, chief China economist at Nomura in Hong Kong. "The rise of the official PMI further reduces the chance [of] monetary policy easing."
The statistics bureau will release May's industrial output, retail sales, and inflation data on June 9, along with fixed- asset investment for the first five months of the year. The customs administration will report May trade data on June 8.
The preliminary reading of a PMI by HSBC and Markit Economics fell to 49.6 in May from 50.4 in April. The drop, if confirmed by the final figure on June 3, will be the first reading below 50 since last October.
Non-manufacturing surveys for May are also due this week, providing a fuller picture of an economy that's becoming increasingly reliant on service industries for growth.