Chinese manufacturing PMI for May points to stabilisation

The contraction in China's manufacturing sector continued in May for a third consecutive month, on the back of weaker than expected demand from overseas, but signs of stabilisation were apparent, economists said.

The HSBC/Markit Chinese manufacturing sector purchasing managers' survey improved in May to a reading of 49.2 from 48.9 in the month before, but remained below the 50-point threshold which marks an expansion in levels of activity.

Economists' median forecast had been for a reading of 49.2.

"New export work declined at the steepest rate since June 2013. Meanwhile, deflationary pressures in the sector eased, with both input and output prices recording the slowest rates of deflation since August 2014," Markit said in a statement.

However, Julian Evans Pritchard at Capital Economics pointed out how the employment and new orders components in both the HSBC survey and in the ‘official’ one, which was published in parallel, improved.

“Overall, today’s PMI readings add weight to our view that the economy is finally turning a corner. With more policy support likely in coming months we are optimistic that growth will begin to pick-up, at least over the short-run.”