Chinese manufacturing contracts in May


Chinese manufacturing contracted in May for the first time in seven months. The result can be added to signals that economic growth is losing steam for a second quarter.

As AAP reports, the preliminary result for China’s Manufacturing purchasing managers' index (PMI) released by HSBC Holdings and Markit Economics was 49.6 in May, compared to a figure of 50.4 in April.

The PMI tracks manufacturing activity. A reading below 50 on the index indicates contraction.

According to the bank's data, this was the worst result since the result of 49.5 last October and the first sub – 50 result since then.

 Commenting on the result, Qu Hongbin, HSBC's economist in Hong Kong said, "The cooling manufacturing activities in May reflected slower domestic demand and ongoing external headwinds,"

He added, the "downside risk to China's fragile growth recovery".

China grew at its slowest pace in 13 years in 2012, with gross domestic product expanding 7.8 per cent in the face of weakness at home and in key overseas markets.

Economic growth rebounded to 7.9 per cent in the final quarter of 2012, raising hopes for a recovery, but in the first three months of this year it slowed to 7.7 per cent.

As The Australian reports, while the Chinese economy is starting to slow, growth is still well above the world average. The government’s economic growth target for this year is 7.5 per cent.

In recent decades, China has experienced near-double-digit yearly rises. Leaders expect that figure to slow as the nation enters a new development stage in which consumer demand, rather than investments and exports, is seen as the key growth driver.


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