China Caixin factory PMI unchanged in May

11th June 2018

China’s manufacturing sector expanded at a steady pace last month as a pick-up in production and domestic business offset a second month of declines in new export orders, a private survey showed.

The Caixin/Markit Manufacturing Purchasing Managers’ index (PMI) was unchanged at 51.1 in May from April, and just above economists’ forecast for a slowdown to 51.

It remained above the 50-point mark that separates growth from contraction for the 12th consecutive month. The output sub-index rose to 51.8 in May, a three-month high, while manufacturers also saw stronger domestic order growth and raised their purchases of inputs.

The survey suggests China’s factories have maintained solid overall growth despite the government’s war on industrial pollution, a slowing housing market, and trade tensions with the United States. An official PMI on Thursday showed the vast manufacturing sector grew at the fastest clip in eight months, signalling broad economic resilience.

Manufacturers in May were more optimistic about future growth prospects, the Caixin survey found, though a reading on export orders was in contraction for a second month. China’s exports have maintained solid growth this year, in line with broad strength among Asia’s big exporters, though the rate of expansion has slowed from last year.

But the US said this week it will continue to pursue action on Chinese imports, including tariffs, just days after Washington and Beijing announced a tentative solution to their dispute. “The index for new export orders picked up in May, but remained in contraction territory, reflecting that the export situation was still grim,” Mr Zhong Zhengsheng, director of Macroeconomic Analysis at CEBM Group, said in a note accompanying the survey.

Inflation pressures are picking back up as higher commodity prices pushed up input prices at the fastest pace in three months, the survey found. A sub-index showed factories shedding workers as firms look to cut costs.


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