China PMI


PMI deteriorates while industrial production improves slightly

The Purchasing Managers' Index (PMI) published by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP) fell from 53.3 points in April to 50.4 points in May. The decline exceeded market expectations, which had the PMI easing to 52.0 points. Furthermore, the reading represents the first monthly decline in six months and, at the current level, the PMI is now sitting at its lowest point so far this year. The May deterioration was broad-based, as all the categories that compose the index recorded losses over the previous month. In particular, the production output and the new orders categories, which, combined, account for over half of the total PMI, suffered some of the largest losses. Export orders, a gauge for future shipments of manufactures, deteriorated for the first time in four months, while the input prices category, which is a reliable leading indicator of consumer prices, lost 10 points and dived below the 50-point threshold that separates expansion from contraction. In May, industrial production added 9.6% over the same month last year, up from the 9.3% increase observed in April. The April figure, however, had represented the weakest pace of expansion since May 2009. Moreover, the print undershot market expectations that had industrial output increasing 9.9%. Owing to the weak reading, the trend continues to point downwards, with annual average growth in industrial production slowing from 12.7% in April to 12.4% in May.

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