Official PMI and Caixin PMI provide different analysis
June 6, 2017 Category Macro-economy, Weekly
Manufacturing activities in China grew faster than expected in May and expansion in services accelerated, pointing to a steady growth outlook. The official purchasing managers index (PMI) came in at 51.2, flat from April, but still expanding for the 10th consecutive month. The sub-index for production stood at 53.4, and the one for new orders at 52.3. The Caixin China General Manufacturing Purchasing Managers’ index fell from 50.3 in April to 49.6 in May, the lowest since June last year. Although Chinese manufacturers increased their production during May, the pace of expansion was the weakest in 11 months, the report said. “The sub-index of purchases signaled a renewed decline, while the sub-index of inventory of finished goods rebounded, indicating that companies have stopped restocking as inventories began to stack up,” said Zhong Zhengsheng, Director of Macro-economic Analysis at CEBM Group, a subsidiary of Caixin Insight Group. “China’s manufacturing sector came under greater pressure in May, and the economy is clearly on a downward trajectory,” he added. The official PMI samples 3,000 manufacturers in China. The Caixin PMi samples some 500 manufacturers and is relatively volatile due to its small sample size and less involvement of large enterprises. The official non-manufacturing PMI, a gauge for the service sector, rose to 54.5 from 54 in April. Being the earliest available economic indicators for May, the PMIs confirmed economists’ expectations that China’s economic growth would ease in the second quarter from an 18-month high of 6.9% in the first three months.
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