By Wang Yanlin
BEIJING, June 2 (Xinhuanet) -- China's manufacturing sector continued to accelerate in May, delivering its best performance so far this year as new orders and production picked up.
The official Purchasing Managers’ Index rose to 50.8 in May from 50.4 in April, the China Federation of Logistics and Purchasing announced yesterday.
The reading, which inched further above the 50-point level marking monthly expansion in factory activity, indicated a pickup in China’s manufacturing sector and the economy as a whole.
“China’s manufacturing is stabilizing thanks to the recovery in new orders and production,” said Zhao Qinghe, an analyst with the National Bureau of Statistics.
Zhang Liqun, a researcher at the State Council’s development research center, said the data indicated that “the economy continued to stabilize, and this trend is becoming evident.”
But experts caution that it is still too early to say that the economic slowdown in China has completely reversed and that economic momentum has been confirmed.
While the sub-indexes for new orders and export orders both rose in May, the sub-indexes for stocking as well as production and business operations both declined, pointing to still cautious attitudes held by companies toward the future market, Zhang told Xinhua news agency.
New orders jumped to a six-month high of 52.3 in May, with production rising to 52.8, the strongest performance since January. The 0.5-point gap between the readings of new orders and production, the smallest in 10 months, indicated more balanced supply-demand relation in the sector, Zhao said.
The sub-index for export orders, which slumped by 1.1 in April, rose by 0.2 to 49.3.
However, the employment sub-index dipped to 48.2 from April’s 48.3, pointing to contraction in the job market.
Zhou Hao, an economist with Australia and New Zealand Banking Group Ltd, said the improvement of PMI suggested economic activities had stabilized somewhat.
“But the improvement is not broad-based as electricity production remains weak,” Zhou said. “Nonetheless, the actual cost of corporate borrowing stayed high, reflecting a credit premium charged by the commercial banks amid the economic slowdown.”
Cai Jin, deputy head of the logistics and purchasing federation, told Xinhua that the continuous rising PMI was a reflection of positive changes in the Chinese economy.
Cai pointed to the remarkable improvement in the sub-index for new orders, reflecting foreign and domestic demand, as an indication of a firm foundation for steady growth.
The official reading was also broadly in line with the HSBC/Markit PMI figure, released in late May, which rebounded sharply to 49.7 in May, hitting a five-month high.
As one of the first leading indicators showing economic momentum, the PMI reading could bode well for the second quarter, when the economy is expected to regain some lost ground.
However, the downward pressure on economic growth still deserves attention, Cai told Xinhua.
While attributing the PMI pickup mainly to the government’s targeted economy-boosting measures, Cai said the “endogenous power” for economic growth had yet to be confirmed, and small businesses still held cautious expectations for future business activities.
(Source: Shanghai Daily)