China May official PMI to affirm weaker second-quarter growth

BEIJING (Reuters) - China's official manufacturing managers' index (PMI) may have eased to 52.2 in May from a 13-month high in April, affirming the economy is slowing for the sixth consecutive quarter even as the government steps up stimulus measures, a Reuters poll showed.

Unexpectedly weak data for April, including a 9.3 percent annual rise in factory output, the weakest pace in nearly three years, has fuelled expectations that the world's second-largest economy would only hit bottom in June at the earliest.

The government is leaning more on fiscal policy to stimulate investment, including speeding up approval of key infrastructure and industrial projects and doling out subsidiaries for buyers of energy-saving home appliances.

China's top banks appeared to have accelerated lending as the government starts to fast track its approval of investment projects, the official Shanghai Securities News reported on Tuesday, citing unidentified sources.

"We expect a pick-up in the factory sector from June as the fiscal policy lends more support," said Zhou Hao, an economist at ANZ bank in Shanghai.

The official PMI will be released on Friday at 9 am local time (0100 GMT).

The HSBC China Flash PMI, the earliest indicator of activity in the vast factory sector, retreated to 48.7 in May from a final reading of 49.3 in April, signaling the seventh straight month of contraction.

The central bank has cut banks' reserve requirement ratio (RRR) by a total of 150 basis points in three moves since November 2011 to support bank lending and economic activity.

Analysts expect another 100 bps in RRR cuts this year, and see annual economic growth dipping to 7.9 percent in the second quarter. That would mark the sixth successive quarter of slowing, but would still be above the official 2012 growth target of 7.5 percent.

The official PMI has run stronger in recent months than the private sector HSBC PMI as the official survey focuses on big, state-owned firms, while the HSBC PMI targets smaller, private firms that have limited access to bank credit.

There are also differing approaches to seasonal adjustment in the surveys.

(Reporting by Kevin Yao; Editing by Kim Coghill)