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23 May 2013

China’s recovery cools

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China’s manufacturing activity went into reverse during May, demonstrating the fragility of the country’s economic recovery. The Flash China Manufacturing PMI™ index for the month fell to 49.6, showing the first contraction in the manufacturing sector since October 2012. The May index is a seven-month low and down from 50.4 in April.

The cooling manufacturing activities in May reflected slower domestic demand and ongoing external headwinds

Qu Hongbin,
Chief Economist for Greater China, HSBC

New orders, including export orders, dropped. Employment fell at a faster rate and manufacturers’ backlog of work also decreased. However, output increased, though at a slower rate. The Flash China Manufacturing Output Index was 51.0, a three month low and down from 51.1 in April.

Qu Hongbin, Chief Economist for Greater China and Co-Head of Asian Economic Research at HSBC, said: “The cooling manufacturing activities in May reflected slower domestic demand and ongoing external headwinds. A sequential slowdown is likely in the middle of 2Q, casting downside risk to China’s fragile growth recovery. Moreover, the further signs of labour market slackness call for more policy support. Beijing still has fiscal ammunition to do so."

Graphic shows HSBC Flash China Manufacturing PMI since 2008

The Flash China Manufacturing PMI™ Index is published about one week before final PMI™ data. It is based on 85 per cent to 90 per cent of total PMI™ survey responses and is designed to provide an accurate indication of the final PMI™ data. An index above 50 signals expansion; below 50 signals contraction.

HSBC’s final China Manufacturing PMI™ for May is due on Monday,
3 June.



The intellectual property rights to the HSBC Flash 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.

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