SINGAPORE (ICIS)--HSBC’s flash manufacturing purchasing managers’ index (PMI) for China rose to a five-month high of 49.7 in May, up from its final reading of 48.1 in April, boosted by the increase in new orders and new export orders, the investment bank said on Thursday.
A PMI reading above 50 indicates an expansion, while a reading below 50 denotes a contraction in manufacturing activities.
“Disinflationary pressures” eased in May and output prices rose for the first time since November last year, said Hongbin Qu, HSBC's chief economist for the China market and co-head for Asian Economic Research.
“However, the employment index fell further to 47.3, which implies that this month's uptick in sentiment has not yet filtered through to the labour market,” Qu said.
While the country’s outlook growth seems promising following the result of recent “mini-stimulus measures and lower borrowing costs”, downside risks still remain, particularly as the property market in China continues to cool, according to Qu.
“We think more policy easing is needed to put a floor under growth in the coming months,” Qu added.