China's unofficial HSBC manufacturing PMI report is out and its disappointing.
The headline number fell to 49.2 from 50.4 a month ago. This was worse than economists' expectation fo 49.6.
A reading below 50 signals contraction.
Here are the key points from Markit:
- Both total new orders and new export orders decline
- Output growth maintained, but at marginal rate
- Purchasing activity falls for the first time in eight months
From HSBC's Hongbin Qu:
“The downward revision of the final HSBC China Manufacturing PMI suggests a marginal weakening of manufacturing activities towards the end of May, thanks to deteriorating domestic demand conditions. With persisting external headwinds, Beijing needs to boost domestic demand to avoid a further deceleration of manufacturing output growth and its negative impact on the labour market. The new leaders should strike a delicate balance between reform and growth.”
On Friday, we learned that China's official PMI report unexpectedly climbed to 50.8 from 50.6 in April. Economists were looking for a decline to 50.0.
All of this comes on renewed fears that China is slowing down again.
China's HSBC PMI report has a greater weight toward small and medium sized enterprises, which tend to be more sensitive to economic swings.
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