China's manufacturing sector expansion remained steady in May, the third month of expansion in a row, official data showed on Wednesday.
The purchasing managers' index (PMI) for May came in at 50.1, the same as in April, according to the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing. A reading above 50 indicates expansion, while a reading below 50 reflects contraction.
NBS statistician Zhao Qinghe said the country's manufacturing activity maintained steady growth last month, partly due to expansion of high-technology manufacturing and consumer goods manufacturing. High-technology manufacturing PMI hit 50.8 and consumer goods manufacturing PMI stood at 51.5.
The NBS highlighted computers, automobiles and consumption-related sectors as the bright spots this month.
By component, the output sub-index stood at 52.3, slightly up from 52.2 a month earlier, and higher than the first quarter's average of 51.3. The sub-index for new orders settled at 50.7, slightly lower than 51 in the previous month but remaining in expansion territory for a third month, indicating steady market demand. The employment sub-index ticked up 0.4 to 48.2, indicating the manufacturing firms were employing fewer people, but the rate of decrease narrowed in May.
"The PMIs in May showed further stabilization in the manufacturing sector. Although new orders softened marginally, this to some extent reflects the weakness in external demand. Domestic demand likely held up relatively well, with signs of faster purchases of intermediate goods as well as re-stocking," said a research note from HSBC.
The Caixin PMI, an indicator of factory activity based on a private survey, showed a similar picture, although it registered a larger fall in export orders, which weighed on the headline index, the HSBC note said.
But Nomura Securities believes the unchanged official PMI contrasts with other leading indicators, including the May Caixin PMI, adding uncertainty to the growth outlook. The Caixin PMI declined by 0.2 to a three-month low of 49.2 in May.
Meanwhile, the official PMI for the non-manufacturing sector came in at 53.1 in May, down from 53.5 in April and 53.8 in March. Although the official non-manufacturing PMI was weaker due to financial market volatility, construction was stronger over the month.
"At the current juncture, [construction] is far more important for economic activity. We had noted earlier that financing for infrastructure investment was quite strong throughout April and May. So a stronger construction activity index could suggest that the financing has helped support infrastructure investment on the ground," said the HSBC note.
China's non-manufacturing PMI down slightly
Business activity in China's non-manufacturing sector expanded at a slower pace in May, official data showed on Wednesday.
The purchasing managers' index (PMI) for the non-manufacturing sector came in at 53.1 in May, down from 53.5 in April and 53.8 in March, but well above the 50 mark that separates expansion and contraction, according to a report released jointly by the National Bureau of Statistics and the China Federation of Logistics and Purchasing.
The non-manufacturing PMI tracks business activity in both the service sector and the construction industry. The service sector sub-index was 52 in May, down 0.5 point from April, said the report.
Businesses related to wholesale, retail, aviation transport, catering and software technology posted sound growth last month. However, road transport, residential services and repairing industries reported a drop in business volumes.
The sub-index for service new orders rose 0.2 points from one month earlier to 48.6 in May, suggesting stronger demand in the non-manufacturing sector. The sub-index for construction activity remained unchanged at 59.4 in May, while that for new orders was up 2.1 points to 52.1.
China Caixin manufacturing PMI slips to 49.2
The Caixin General China Manufacturing Purchasing Managers' Index (PMI), an indicator of factory activity based on a private survey, fell to a three-month low of 49.2 in May.
The reading, released on Wednesday after research by financial information service provider Markit sponsored by Caixin Media, was down from 49.4 in April and 49.7 in March, signalling a marginal deterioration in the manufacturing sector. A reading above 50 indicates expansion, while a reading below 50 represents contraction.
The data came on the heels of the official PMI that showed manufacturing activity stayed in expansionary mode for a third consecutive month in May.
The official PMI came in at 50.1 last month, unchanged from April, according to data released by the National Bureau of Statistics and the China Federation of Logistics and Purchasing.
The official PMI samples 3,000 relatively large enterprises in China.
The Caixin PMI samples 420 small and medium-sized manufacturing enterprises and is relatively volatile due to its small sample size and the dominance of small enterprises.
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