China’s manufacturing unexpectedly accelerated last month, indicating a slowdown in economic growth in the first quarter may be stabilizing.
The Purchasing Managers’ Index (PMI) rose to 50.8 from 50.6 in April, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in Beijing yesterday.
That was higher than all estimates in a Bloomberg News survey of 30 analysts and compares with the median projection of 50, which marks the dividing line between expansion and contraction.
Yesterday’s report may provide some comfort to policymakers after the preliminary reading of a private manufacturing survey released on May 23 pointed to the first contraction in seven months.
Chinese Premier Li Keqiang (李克強) said this week that government measures to reform the economy will be accompanied by tapered-off levels of growth and warned last month new stimulus would create risks.
“Given the mixed signals, I’d wait for the full set of activity data such as industrial production and electricity production to judge the momentum of the economy,” said Zhang Zhiwei (張智威), chief China economist at Nomura Holdings Inc in Hong Kong.
“The rise of the official PMI further reduces the chance for monetary policy easing,” Zhang added.
The statistics bureau will release last month’s industrial output, retail sales and inflation data on June 9 along with fixed-asset investment for the first five months of the year.
The customs administration will report last month’s trade data on Saturday.
The preliminary reading of a PMI released by HSBC Holdings PLC and Markit Economics fell to 49.6 last month from 50.4 in April.
The drop, if confirmed by the final figure tomorrow, will be the first reading below 50 since October last year.
The federation and HSBC will also release non-manufacturing surveys for last month next week, providing a fuller picture of an economy that’s becoming increasingly reliant on service industries for growth. Both showed slower expansion in April.
Stocks in China fell 0.7 percent on Friday on concern yesterday’s report would show a decline.
The Shanghai Composite Index rose 0.5 percent for the week and has rebounded 5.8 percent from this year’s low on May 2.
“Markets’ fear of a further growth slowdown will be alleviated and we expect a positive market reaction” on Monday, Lu Ting (陸挺), head of Greater China economics at Bank of America Corp in Hong Kong, said in a note yesterday.
Analysts are paring forecasts for economic growth after expansion unexpectedly eased to 7.7 percent in the first quarter from a year earlier.
The median estimate in a Bloomberg News survey conducted from May 16 to May 21 was for a pace of 7.8 percent in the second quarter, down from a projection of 8 percent in an April survey.