China's manufacturing Purchasing Managers' Index (PMI) expanded for the 10th straight month in May, while the non-manufacturing PMI increased at a faster pace, suggesting a stabilizing Chinese economy.
The manufacturing PMI came in at 51.2 in May, flat compared to April and staying above the 50-point mark that separates expansion from contraction, the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP) said on Wednesday.
Driven by infrastructure and real estate, the non-manufacturing PMI came in at 54.5 this month, up from 54 in April, remaining above 54 for eight consecutive months.
NBS statistician Zhao Qinghe said both production and demand showed signs of stabilization in the manufacturing sector, while the non-manufacturing sector is gradually picking up steam as business confidence builds strength.
The manufacturing sub-index for production stood at 53.4 in May, down from 53.8 in April, while the sub-index for new orders came in at 52.3 in May, unchanged from April. The non-manufacturing sub-indices for new business orders and activity expectations came in at 50.3 and 59.2, respectively, indicating the industry will keep growing relatively rapidly in the months to come, according to Zhao Qinghe.
Chen Zhongtao, an analyst at the China Logistics Information Center, said May PMI suggested positive factors had grown for the Chinese economy, including balanced supply and demand, better performance of companies and a good job market.
The manufacturing PMI for medium-sized enterprises stood at 51.3 in May, up from 50.2 in April, while PMI for small enterprises came in at 51 in May, the highest in five years.
Equipment manufacturing, high-tech manufacturing and consumer goods manufacturing continued robust growth, with the sub-indices all registering above 52, indicating the increasingly important roles they play in the manufacturing sector.
Meanwhile, the service sector, which accounts for more than half of the country's gross domestic product (GDP) last year, saw robust growth in May, with the index rising to 53.5 from 52.6 in April. The construction industry index continued its fast growth, staying above 60 for the ninth month.
"A stronger performance by the service sector is a positive, though construction continues to do much of the work in supporting the index," noted Bloomberg economist Tom Orlik.
The latest reading reaffirmed a stabilizing Chinese economy, said Zhang Liqun, a researcher with the Development Research Center under the State Council.
The PMI data represent the latest in a series of economic indicators showing modest improvement in the economy. China's gross domestic product grew 6.9 percent in the first quarter of this year, 0.2 percentage points higher than the same period last year and 0.1 percentage point higher than last quarter. It is the seventh consecutive quarter that China has maintained economic growth between 6.7 and 6.9 percent, a demonstration of its economic stability.
Industrial companies with annual revenues of more than 20 million yuan (about 2.92 million U.S. dollars) reported profits of 2.28 trillion yuan in the first four months, a 24.4-percent increase from one year earlier.
Some 4.65 million new jobs were created in China in the first four months of the year, 220,000 higher than the same period last year.
The consumer price index increased 1.4 percent in the first four months of the year, well below the government target of around 3 percent for the year.
Chinese people's per capita real disposable income, after inflation, increased 7 percent in the first quarter, outpacing the GDP growth rate of 6.9 percent in the period.
China International Capital Corporation (CICC) forecast in a research note that China's economic growth will continue to be solid in the second half of the year.
"Our baseline scenario continues to forecast solid growth in 2H, as we see a relatively limited increase of funding cost to the real economy so far," said the report.
Latest comments