06.06.2011, 07:23
China Manufacturing Continues to Slow in May with PMI Decline
OREANDA-NEWS. June 06, 2011. Manufacturing in China continued to slow in May, with the Purchasing Managers Index (PMI) of the manufacturing sector falling 0.9 percentage points month-on-month to 52 percent, according to the China Federation of Logistics and Purchasing (CFLP).
It was the second consecutive month of decline for the PMI, a gauge of of the manufacturing expansion, as the government seeks to curb soaring prices and cool the economy.
The PMI figure was 52.9 percent in April, 53.4 percent in March, 52.2 percent in February and 52.9 percent in January.
A reading above 50 percent indicates economic expansion, while below 50 percent indicates contraction. China's PMI has remained above the boom-and -bust line for 27 consecutive months.
The PMI decline in May shows economic growth is steadily slowing, according to the CFLP.
With regard to the sub-indexes, the purchase price index, which measures the cost of raw materials, led the declines with a month-on-month drop of 5.9 percentage points in May, while the new orders index, backlog orders index and raw material inventory index all posted a declines of more than 1 percentage point.
"The continuous decline underlines that China's economy is more likely than not to slow down," Zhang Liqun, a researcher with the Development Research Center of the State Council, said in the CFLP statement.
"Furthermore, the sharp decline of the purchase price index suggests the inflationary expectations may ease," Zhang said.
The CFLP data shows that the new orders index, which reflects domestic demand, fell 1.7 percentage points from April to 52.1 percent in May.
To break down the May data by 20 industries, the PMI reading for 14 sectors such as electronic machinery and oil refinery and coking remained above the boom-or-bust line of 50 percent, while the reading for chemical fibre and rubber and plastics products, transportation equipment manufacturing was below 50 percent.
Liu Tiejun, an analyst with Haitong Securities, said the monthly decline of PMI in May was within his expectations.
"Judging from PMI data in the past, the PMI figure for the manufacturing sector all fell on a month-on-month basis," Liu said.
The CFLP data was still higher than the preliminary reading of the HSBC China Manufacturing PMI, which dropped to a 10-month low of 51.1 percent in May.
The HSBC survey covers 400 companies, while the CFLP's monthly PMI reports measure data from 820 companies across a range of China's manufacturing sectors, including energy, metals, textiles, automobiles and electronics.
It was the second consecutive month of decline for the PMI, a gauge of of the manufacturing expansion, as the government seeks to curb soaring prices and cool the economy.
The PMI figure was 52.9 percent in April, 53.4 percent in March, 52.2 percent in February and 52.9 percent in January.
A reading above 50 percent indicates economic expansion, while below 50 percent indicates contraction. China's PMI has remained above the boom-and -bust line for 27 consecutive months.
The PMI decline in May shows economic growth is steadily slowing, according to the CFLP.
With regard to the sub-indexes, the purchase price index, which measures the cost of raw materials, led the declines with a month-on-month drop of 5.9 percentage points in May, while the new orders index, backlog orders index and raw material inventory index all posted a declines of more than 1 percentage point.
"The continuous decline underlines that China's economy is more likely than not to slow down," Zhang Liqun, a researcher with the Development Research Center of the State Council, said in the CFLP statement.
"Furthermore, the sharp decline of the purchase price index suggests the inflationary expectations may ease," Zhang said.
The CFLP data shows that the new orders index, which reflects domestic demand, fell 1.7 percentage points from April to 52.1 percent in May.
To break down the May data by 20 industries, the PMI reading for 14 sectors such as electronic machinery and oil refinery and coking remained above the boom-or-bust line of 50 percent, while the reading for chemical fibre and rubber and plastics products, transportation equipment manufacturing was below 50 percent.
Liu Tiejun, an analyst with Haitong Securities, said the monthly decline of PMI in May was within his expectations.
"Judging from PMI data in the past, the PMI figure for the manufacturing sector all fell on a month-on-month basis," Liu said.
The CFLP data was still higher than the preliminary reading of the HSBC China Manufacturing PMI, which dropped to a 10-month low of 51.1 percent in May.
The HSBC survey covers 400 companies, while the CFLP's monthly PMI reports measure data from 820 companies across a range of China's manufacturing sectors, including energy, metals, textiles, automobiles and electronics.
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