China PMI plunges to 50.4 in May

China , Economic Indicators Jun 04, 2012 1 Comment

Chinese Federation of Logistics and PurchasingManufacturing 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.

Chinese PMI

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.

China announced this week a series of measures to support key sectors of its economy, such as automobiles and steel, without any full-scale stimulus plan.

In the first quarter, growth in China fell to 8.1%, its lowest level in almost three years, due to the weakness of its major export markets such as the United States and Europe, analysts said.

Beijing expects a growth of 7.5% for 2012, much lower than the previous two years.

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Pascal Blanc

Pascal has implemented numerous software solutions in the areas of procurement, sourcing, spend management, supplier evaluation and performance. His clients include Fortune 500 companies in Europe, Asia and North America. He is a co-founder of Source & Procure.

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