Manufacturing purchasing management index (PMI) came at 51.9 percent in May, 0.5 percentage points and 0.7 percentage points higher than that in last month and the same period of last year. It hit an 8-month high since October of last year, according to National Bureau of Statistics (NBS).
A research team of Huatai Securities thought that industry data may be recovering by stage and will last till the beginning of the third quarter. However, the economic downturn for the whole year is expected to be slow.
Among the sub-index of manufacturing PMI in May, other four indexes all rose expect that supplier delivery time fell a little. Among them, production index and new order index hiked largely by about one percentage point. Raw material inventory index and employee index picked up slightly by 0.1 percentage point to 49.6 percent and 49.1 percent, respectively.
Increase in several indexes and fast expansion in manufacturing indicated that impetus for economic operation is sufficient, according to a team led by Lian Ping from financial research center of Bank of Communications.
Purchase price and ex-factory price of main raw material recorded 56.7 percent and 53 percent, which saw huge increase of 3.7 percentage points and 3 percentage points from the previous month, respectively.
The team led by Lian Ping indicated that rise in prices of international commodity and particularly crude oil brought inflation to China’s industry, which is the major contributor to the increasing purchase price of raw material. Petroleum processing and coking, ferrous metal melting and rolling processing saw the biggest rise in prices. Rapid growth in profits of industrial enterprises and recovery in market demand boosted industrial production and sales, which was the reason driving prices in manufacturing supply and demand.
The significant rise in two ex-factory price indexes indicated that the year-on-year increase in PPI will pick up to around 3.8 percent in May, according to a team led by chief researcher Li Qilin from Lianxun Securities.
Statistics also indicated that enterprises with insufficient funds accounted for 40.1 percent in the month, up by three months. In the opinion of NBS senior statistician Zhao Qinghe, this implies that the support of finance sector serving the real economy will still be further improved. Meanwhile, enterprises with high costs in raw material and labor accounted for over 40 percent. Facing large pressure from costs is still one of major problems for enterprise production and operation.
Translated by Vanessa Chen