China’s May Caixin purchasing managers’ index fell to three-month low following slightly subdued output coupled with lesser new orders, signaling a marginal drag down on the economy.
The Caixin China manufacturing PMI weakened to 49.2 in May from 49.4 the previous month on a scale where readings below 50 signify contraction in the economy.
Further, the number of job lay-offs remained consistent as well, with the rate of reduction close to that of February’s post-global financial crisis record. Also, prevalence of weak demand also weighed on consumers’ purchasing capacity and inventory holdings in the previous month. Inflationary pressures appeared to cool slightly, however, with input prices and output charges both rising at weaker rates, reports said.
The Caixin PMI report is based on a survey of more than 400 small-to-mid sized private manufacturing companies across China. The country’s non-manufacturing sectors also weakened last month, but remained in expansion territory, the NBS also reported on Tuesday. The official China non-manufacturing PMI weakened to 53.1 from 53.5 in April.
“Overall, China’s economy has not been able to sustain the recovery it had in the first quarter and is in the process of bottoming out,” said Zhengsheng Zhong, Director of macroeconomic analysis, CEBM Group.
The People’s Bank of China has indulged in a wide array of easing this year, bringing the central bank’s policy rate down to an all-time low. Beijing has since opted to remain on the sidelines, where it is expected to remain until the fourth quarter. That is when further rounds of stimulus are expected, according to a recent forecast of economists conducted by Bloomberg News.
Purchasing activity fell for the second successive month in May, though the rate of reduction eased since April and was marginal. Stocks of finished items fell at a much slower pace than in April, however, while inventories of inputs fell modestly, Markit reported.
The material has been provided by InstaForex Company – www.instaforex.com