Activity in China’s manufacturing sector unexpectedly slows in May – PMI

China’s official manufacturing purchasing managers’ index (PMI) dropped to 49.5 in May from 50.4 in April and missed forecast at 50.4, hitting the levels below the 50 level, which separates growth from contraction.

The unexpected slowdown in manufacturing activity in the world’s second-largest economy in May adds to negative signals, as prolonged property crisis continues to hurt business, consumer and investor confidence. 

Weak May PMI numbers reflect soft domestic demand and contribute to a series of recent indicators showing that China’s economy is struggling to get back on its feet, offsetting earlier optimism seen after better-than-expected output and trade data.

However, economists keep cautious optimism on hopes that  May reading is a temporary and see chances for improvement in June as new government policies start to impact, such as the property rescue plan and the issuance of special sovereign bonds.