Caixin manufacturing PMI slips into contraction in May

0 Comment(s)Print E-mail Xinhua, June 1, 2017
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A private survey showed Thursday that China's manufacturing activities slowed in May, as an index for the sector fell into contraction territory.

The Caixin China General Manufacturing Managers' Index (PMI) slipped to 49.6 in May from 50.3 in April, according to the survey conducted by financial information service provider Markit and sponsored by Caixin Media Co. Ltd.

A reading above 50 indicates expansion, while a reading below 50 represents contraction. The May data is the first contraction in 11 months.

The Caixin PMI was in contrast with the official manufacturing PMI reading of 51.2 in May, flat with April, which indicates expansion for the 10th-straight month.

The official PMI samples 3,000 manufacturing enterprises in China. The Caixin PMI samples some 500 manufacturers and is relatively volatile due to its small sample size and less involvement of large enterprises.

Caixin said manufacturers have reported softer growth in production, which reflected a relatively muted increase in total new orders during May.

Meanwhile, data indicated that customer demand was relatively subdued both at home and overseas, with new export sales rising at a similarly marginal pace, it said.

Employment also declined at the quickest pace since last September, which was partly linked to downsizing by companies and non-replacement of voluntary leavers.

Weaker-than-expected sales weighed on purchasing, according to Caixin. As a result, inventory of inputs declined at the quickest pace since January.

Caixin said China's manufacturing sector had "come under greater pressure" in May, citing Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin Insight Group, who believes that the economy is on a downward trajectory.

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