BEIJING May 23 China's factory activity shrank
for the first time in seven months in May as new orders fell, a
preliminary survey of purchasing managers showed, adding to
concerns that a recovery in the world's second-largest economy
The flash HSBC Purchasing Managers' Index for May fell to
49.6, slipping under the 50-point level demarcating expansion
from contraction for the first since October. The final HSBC PMI
stood at 50.4 in April.
A sub-index measuring overall new orders dropped to 49.5,
the lowest reading since September, suggesting China's domestic
economy is not strong enough to offset soft external demand.
"The cooling manufacturing activities in May reflected
slower domestic demand and ongoing external headwinds," said Qu
Hongbin, chief China economist at HSBC.
The survey also showed new export orders hovered below the
50-point level in May, though the rate of decline slowed from
Still, the weak showing implied foreign demand remained
lethargic due to a patchy U.S. recovery and Europe's nagging
debt crisis, and echoes weak export momentum seen in Taiwan and
South Korea in May.
"A sequential slowdown is likely in the middle of the second
quarter, casting downside risks to China's fragile growth
recovery," Qu added.
China posted lacklustre data for industrial output and
investment in April after an unexpected economic slowdown in the
first quarter, raising fears of a feeble recovery in coming
Reflecting the cooling activities in the vast factory
sector, both indices for input and output prices stayed muted in
May to be near troughs seen in the third quarter last year.
An employment sub-index pulled back slightly again in May
though local media reports suggest China's job situation is
still holding up this year.
The HSBC flash PMI comes a week before the final reading and
should reinforce market expectations that an economic recovery
this year would be modest, if one is seen at all.
Following the underwhelming data in April, some analysts
have slashed their forecasts for China's 2013 economic growth
towards 7.5 percent from initial predictions closer to 8