China's official purchasing managers’ index (PMI) showed that manufacturing grew less than estimated last month, stoking speculation that policymakers will unveil more stimulus to counter a deceleration in the world’s second-biggest economy.
China’s manufacturing PMI was 50.4 in May, the National Bureau of Statistics and China Federation of Logistics & Purchasing said today. The reading compares with the 52.0 median estimate of economists.
The official data came in below expectations. Economists had expected a reading of 51.5.
A print below 50 implies contraction while a reading above 50 indicates expansion.
CFLP said that while the data showed a slowdown, the index has remained above the 50-point threshold for six months, indicating that growth momentum has not changed. It also added that the drop in PMI doesn’t mean that the Chinese economy has entered a new phase of recession.
Meanwhile, the HSBC survey showed that China's factory activity contracted for a seventh straight month in May.
The final reading of the HSBC manufacturing PMI fell to 48.4 in May on a 100-point scale, compared to a April's 49.3, and weaker than an initial "flash" reading of 48.7.
Among sub-components of the HSBC PMI, measures of new orders and output both fell below the 50-level, which separates expansion from contraction.
"May's final reading confirmed that manufacturing growth slowed further on weakening demand from both global and domestic markets," HSBC said in a note accompanying the PMI.