China economic activity stabilised in May, but ‘rosy picture’ faces multiple challenges ahead
- Official manufacturing purchasing managers’ index (PMI) fell slightly to 51.0 in May from 51.1 in April
- Non-manufacturing PMI – which gauges activity in the services and construction sectors – rose slightly to 55.2 from 54.9 the month before
The “rosy picture” of China’s economic activity as it stabilised in May faces multiple challenges ahead as high commodity prices, chip shortages, the uncertainty of the yuan’s direction and a resurgence of coronavirus cases in the key factory province of Guangdong present an elevated level of risk, analysts said.
A slight drop in manufacturing sector activity in May, attributed partly to factory closures for the seven day “golden week” holiday at the start of the month, was offset by a slight rise in non-manufacturing sectors that were boosted by consumer activity during the break, according to the latest official purchasing managers’ indices (PMI) released on Monday.
A reading above 50 indicating growth in sector activity, while a reading below the mark represents contraction. The higher the reading above 50, the faster the pace of expansion.
After the spending spree in May, we think that consumers will start saving for the long October holidays for their next spending spree
The official non-manufacturing PMI – which measures morale in the services and construction sectors – rose to 55.2 in May from 54.9 in April. The reading was slightly above expected.