Adjusted for seasonal factors, the HSBC Purchasing Managers’ Index™ (PMI™) – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – posted at 49.2 in May. Although this was up slightly from 48.9 in April, the index remained below the crucial 50.0 neutral mark and signalled a third successive monthly deterioration in the health of China’s manufacturing sector.
However, the rate of deterioration remained only slight. May data signalled a renewed fall in Chinese manufacturing output, after production volumes stagnated in April. Although the rate of decline was only marginal, it was the first time that output had contracted since last December.
Anecdotal evidence suggested that a softening in market conditions had dampened client demand. Furthermore, total new business placed at Chinese manufacturers has now fallen for three successive months. Data suggested that weaker demand from abroad was the main factor behind the latest reduction in new work.
Moreover, the latest fall in new export business was the sharpest in nearly two years. Manufacturers tempered their production plans in line with fewer new orders in May, with purchasing activity falling for the second month in a row. Consequently, stocks of purchases fell in May, though the rate of depletion was only slight.
