China's manufacturing activity shrinks in May – HSBC

24 May 2012 10:17  [Source: ICIS news]

SINGAPORE (ICIS)--China’s manufacturing activity – as measured by the preliminary HSBC purchasing managers’ index (PMI) – has contracted for a seventh straight month amid weak overseas demand, UK-based banking firm HSBC said on Thursday.

HSBC’s “flash” reading of the PMI fell to 48.7 in May, down from a final reading of 49.3 in April, it said in a statement.

A figure above 50 indicates an expansion, while a figure below 50 represents a contraction.

The new-export orders sub-index showed a contraction in May, following a rise in April, while output expanded in May following a decline in the previous month, HSBC said, without further elaboration.

“Manufacturing activities softened again in May, reflecting the deteriorating export situation,” its chief China economist, Hongbin Qu, said.

“This calls for more aggressive policy easing, as inflation continues to slow,” Qu said.

The Chinese government has been and will step up easing efforts in order to stabilise economic growth, as shown by a series of measures to boost liquidity, public housing and infrastructure investment and consumption, according to Qu.

“As long as the easing measures filter through, China will secure a soft landing in the coming quarters,” Qu added.

China’s economy grew at an annual pace of 8.1% in the first quarter, compared with an 8.9% growth rate in the previous quarter.

By: Nurluqman Suratman

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