On surveying Chinese factory sector, manufacturing activity was discovered to be a little better than what was anticipated in May. For the month of May, Caixin/Markit factory Purchasing Managers’ Index was recorded as 50.2, which was higher than 50, as expected by analysts. For April, PMI was 50.2. If PMI readings are above 50, they indicate expansion. Anything below that shows contraction. Official manufacturing PMI of China for May was 49.4 last week, lower than economists’ estimated reading of 49.9. It was also below 50.1, as recorded in April. Official non-manufacturing PMI remained at 54.3, unchanged from its April reading. May saw new orders growth and growth in new businesses.
In spite of steady reading being in expansionary territory, a fall in business confidence was recorded. The slip was the lowest ever since beginning of survey in April 2012. These concerns came amid predictions of relatively lower global demand and threats posed by escalating US-China trade dispute. Analysts cautioned that official PMI data prove that China’s growth is under pressure, in spite of earlier optimism that officials had managed to stabilize second-largest global economy. Prior to Caixin indicator being released, a Mizuho Bank economist, Vishnu Varathan, stated that data won’t supplant overall economic pessimistic sense despite it turning out to be unexpectedly resilient.
PMI is a business survey about operating environment. Data like these offer first glimpses into activities and happenings of an economy, due to them being among the first and foremost major economic indicators that are released every month. PMI, for China, is one of the economic indicators that is globally watched by investors for any sign of trouble in the middles of domestic headwinds and currently continuing trade conflict with the US. Official PMI surveys typically poll large proportion of major state-owned enterprises and businesses. Caixin indicator, a separate survey, features larger mix of medium and small-sized firms.