China May factory PMI growth keeps pace with previous month

After years of decline due to lost competitiveness, French manufacturers have seen business improve markedly over the last eight months as the domestic and global economies have picked up speed.

This PMI measures changes in activity levels across China's manufacturing sector from one month to the next. The weaker than expected figures reflected the lagged impact of demonetization, Goldman Sachs said in an early morning note, adding that economic growth for the year remained in line with expectations.

"The domestic market persisted as the driving force, but the weak pound's continuing bounty meant levels of export orders also increased, for the thirteenth month, as export markets made use of the competitiveness of United Kingdom firms".

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.

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.

New orders declined to 55.7 from 57.6, while output declined to 54.3 from 55.8.

Some manufacturers also cited weak export sales, as highlighted by a slower upturn in new work from overseas than that seen in April.

Cost burdens facing Indian goods producers continued to rise in May, with chemicals, metals, paper and plastics all reported to be up in price.

"Demand for goods is growing at the steepest rate for six years, encouraging manufacturers to step up production and take on extra staff at a rate not previously seen in the two-decade history of the PMI survey".

China's factory activity contracted in May for the first time in nearly a year, independent figures showed on Thursday (Jun 1), hinting at deteriorating conditions for goods producers in the world's second largest economy. Subsequently, stocks of purchases rose, with the pace of accumulation the quickest in the current three-month sequence of growth.

Hardly a strong result, even with new orders - a lead indicator on future activity levels - continuing to grow at a marginal rate. "The degree of positive sentiment was relatively muted, however", IHS Markit senior economist Paul Smith said in the report today.

  • Zachary Reyes