China’s manufacturing activity fell for the first time in seven months as export orders weakened. The HSBC Purchasing Managers’ Index™ (PMI™) dropped to 49.2, down from 50.4 in April.
Total new orders fell for the first time since September 2012. New export orders dropped for the second month in a row, and purchasing activity was lower for the first time in eight months. A number of companies suggested that lower demand, particularly in the US, had led to the drop in export orders.
Qu Hongbin, Chief Economist for Greater China and Co-Head of Asian Economic Research, said: “The downward revision of the final HSBC China Manufacturing PMI™ suggests a marginal weakening of manufacturing activities towards the end of May, thanks to deteriorating domestic demand conditions.”
With persisting external headwinds, Beijing needs to boost domestic demand to avoid a further deceleration of manufacturing output growth and its negative impact on the labour market
Chief Economist for Greater China, HSBC
He added that the weakness may encourage China to consider further economic stimulus to revitalise economic growth. “With persisting external headwinds, Beijing needs to boost domestic demand to avoid a further deceleration of manufacturing output growth and its negative impact on the labour market. The new leaders should strike a delicate balance between reform and growth.”
The PMI™ showed staff numbers fell for the second month in a row, though the rate of job reductions was modest. There was better news on manufacturing output, which rose for the seventh month in a row, though the increase was marginal. Inflationary pressures eased with the cost of raw materials falling for the third successive month, and a number of firms passing on lower costs to their customers.
The HSBC China Purchasing Managers’ Index™ is based on data from purchasing executives in more than 420 manufacturing companies. A reading above 50 suggests expansion, while below 50 suggests decline.
The intellectual property rights to the HSBC China Manufacturing PMI™ provided herein is owned by Markit Economics Limited. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markit’s prior consent. Markit shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers' Index™ and PMI™ are trade marks of Markit Economics Limited, HSBC use the above marks under license. Markit and the Markit logo are registered trade marks of Markit Group Limited.