Based on incomplete data, the purchasing managers' index (PMI) in May is estimated to be 51.1 its lowest level in 10 months indicating that growth momentum has been weakened due to the current trend of deflation, according to a PMI preview report released by HSBC.
The PMI is an economic indicator derived from the percentage of purchasing managers in a given region who report that business conditions are better, worse or the same as during the previous month. A score of 50 indicates that purchasing managers as a group reported no change from the previous month.
However, Qu Hongbin, chief economist of HSBC China, expressed optimism about the situation. He thinks there is no reason to worry about the hard landing of the economy, and he said the current austerity measures will continue to be effective.
In May, the number of new orders in China's manufacturing industries continued to increase but at a slower pace. Employment growth has remained flat compared to last month while factory and input prices continue to rise but more slowly.
Qu says, the decelerated growth of new orders has led to the lowest growth rate in 10 months. However, the current PMI level is consistent with the 9 percent GDP growth rate, so the primary cause remains deflation.
The "HSBC China Manufacturing PMI Preview" is issued monthly based on 85 percent to 90 percent of the total sample survey. HSBC's final report on the PMI for May will be published on June 1. The final values of March and April were both 51.8.
By People's Daily Online
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