China's Caixin Manufacturing PMI steadies at 51.1 in May, surprises positively

China's May Caixin manufacturing PMI came in at 51.1 vs. 51.0 expected and 51.1 last, with the production and total new orders both modestly higher.

On Thursday, the purchasing managers' index (PMI) for China's manufacturing sector arrived at 51.9 in May, up from 51.4 in April, the National Bureau of Statistics (NBS) reported.

Summary

May survey data pointed to only a modest expansion of China’s manufacturing sector. Growth in production and new orders picked up slightly from April, while firms reported a further fall in new export sales. At the same time, companies reduced staffing levels again as part of efforts to cut costs and raise efficiency. This, in part, drove a further increase in outstanding workloads. Inflationary pressures meanwhile intensified, with both input costs and output charges rising at solid rates. Although confidence towards the 12-month outlook for production improved in May, optimism remained subdued by historical standards.

The headline seasonally adjusted Purchasing Managers’ Index™ (PMI™) – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – was unchanged from the previous month at 51.1 in May. The reading signalled a further modest improvement in the health of the sector. Operating conditions have now strengthened in each month for the past year.

Commenting on the China General Manufacturing PMI™ data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said: “The Caixin China General Manufacturing PMI stood at 51.1 in May, the same as the reading in April, showing that growth was sustained. The output and new order indices both rose, while the employment index dipped, indicating a stable supply and demand situation, but no signs of job creation in the sector. Overall, operating conditions across the manufacturing sector remained stable. The growth in the price of industrial products has gained momentum, however, the export situation was still disappointing.”