Manufacturing activity in China has greatly eroded in May, according to official data released Friday, which confirms a more general slowdown in growth in the world’s second-largest economy.
The Purchasing Managers Index (PMI) published by the Chinese Federation of Logistics and Purchasing (CFLP), an organization close to the government, took a dive to 50.4 from 53.3 in April. A reading above 50 indicates an expansion in manufacturing activity, while a reading below 50 indicates contraction.
Economists had expected a decrease to 51.5, according to Dow Jones Newswires.
“The relatively sharp decline in the PMI in May is in line with the trend of economic slowdown,” said Zhang Liqun, an analyst with the CFLP.
HSBC, which measures its own PMI , announced Friday a figure of 48.4 in May, the seventh consecutive month under the 50 threshold.
The CFLP PMI is known to give a greater weight to big businesses and underestimate the importance of SMEs which explains the difference between the two measures.
Beijing expects a growth of 7.5% for 2012, much lower than the previous two years.