China's May PMI drops to 50.4%

English.news.cn 2012-06-01 09:23:59

http://news.xinhuanet.com/english/china/2012-06/01/c_131624620.htm

BEIJING, June 1 (Xinhua) -- China's Purchasing Managers Index (PMI), a readout of the country's manufacturing activity, ended five consecutive months of growth in May and retreated to 50.4 percent, indicating a slowing economy.

The PMI in May was down 2.9 percentage points from that in April, the China Federation of Logistics and Purchasing (CFLP) said Friday.

The figure in May showed China's economy decelerated but the growth trend remained unchanged, as the reading still stood above 50 percent, the CFLP said in a statement.

A PMI reading of 50 percent demarcates expansion from contraction.

"The short-term moderation of economic growth at present does not mean the Chinese economy is entering a new recession stage," the statement said.

From November to April, the PMI saw steady increases from 49 percent to 50.3 percent, 50.5 percent, 51 percent, 53.1 percent and 53.3 percent.

The world's second-largest economy is likely to further lose steam as the sub-index for new orders slumped, pointing to even weaker future factory activity, Zhang Liqun, a researcher with the Development Research Center of the State Council, forecast.

The sub-index for new orders dipped below 50 percent in May, down 4.7 percentage points to 49.8 percent, indicating shrinking demand in the manufacturing sector, the CFLP data show.

However, Zhang noted that the economic downshift will be mitigated by government efforts to maintain growth, especially policies aimed at stabilizing investment.

China's economy expanded 8.1 percent year on year in the first quarter of 2012, nearly reaching a three-year low over diminishing export orders and a flagging property market.

The central government pledged last month that it would give more attention to stabilizing economic growth, warning that the economy faces "increasing downward pressure."

In the latest moves to shore up investment and growth, a series of policies were announced last month to open the channels for private investment to flow into state-dominated sectors, and a plan was adopted on Wednesday by the State Council to boost the development of seven strategic emerging industries.