China’s economic recovery continues to stutter with manufacturing facing ‘downward spiral’ as demand weakens
- China’s official manufacturing purchasing managers’ index (PMI) fell to 48.8 in May from 49.2 in April, while the non-manufacturing gauge fell to 54.5 from 56.4
- China’s economic recovery has been hit by rising youth unemployment as well as disappointing retail sales and industrial production
The risk of a “downward spiral” in China’s manufacturing sector is becoming a real possibility, analysts say, with weak demand “the culprit” for factory activity contracting further in May to the lowest level since the end of last year.
Within the official manufacturing PMI, the new-orders subindex fell to 48.3 in May from 48.8 in April, while the new-export-orders subindex fell to 47.2 from 47.6.
The official non-manufacturing PMI, which measures business sentiment in the services and construction sectors, continued to grow but expanded at the slowest pace in four months after falling to 54.5 in May from 56.4 in April.
The official PMIs disappointed the markets again in May
“The official PMIs disappointed the markets again in May. The sharper contraction in the manufacturing PMI suggests that the risk of a downward spiral, especially in the manufacturing sector, is becoming more real,” said analysts from Japanese investment bank Nomura.