China's manufacturing activity contracted for the first time in seven months in May as new orders fell, according to preliminary data released Thursday from HSBC.
Zee Media Bureau
Beijing: China's manufacturing activity contracted for the first time in seven months in May as new orders fell, according to preliminary data released Thursday from HSBC, adding to concerns that a recovery in the world's second-largest economy is sputtering.
HSBC said the preliminary or “flash” version of its Purchasing Managers’ Index for May fell to a seven-month low of 49.6 compared to 50.4 in April.
A sub-index measuring overall new orders dropped to 49.5, the lowest reading since September, suggesting China's domestic economy is not strong enough to offset soft external demand.
Asian stock markets outside of Japan extended early losses after the report. Oil, copper and rubber prices also fell, while the Australian dollar skidded by a quarter of a US cent.
Thursday's PMI revives investors' concerns about the strength of China's economic recovery this year, if one is seen at all. April economic data released earlier this month had already underwhelmed markets and dented confidence.
It is also likely to fuel a debate over whether policymakers should take action to spur growth, though Chinese Premier Li Keqiang said earlier this month that the nation has little room for fiscal stimulus.
The PMI survey showed new export orders hovered below the 50-point level in May, though the rate of decline slowed from April.
Still, the weak showing implied foreign demand remained lethargic due to a patchy U.S. recovery and Europe's nagging debt crisis, and echoes weak export momentum seen in Taiwan and South Korea in May.
China posted lacklustre data for industrial output and investment in April after an unexpected economic slowdown in the first quarter, raising fears of a feeble recovery in coming months.
Reflecting the cooldown in the vast factory sector, both indices for input and output prices stayed muted in May to be near troughs seen in the third quarter last year.
An employment sub-index pulled back slightly again in May though local media reports suggest China's job situation is still holding up this year.
With Agency Inputs