HSBC’s flash PMI for China touches five-month high

HONG KONG - HSBC’s flash Purchasing Managers Index (PMI), a survey of conditions on the factory floor, beat expectations with a five-month high of 49.7 in May, compared with a 48.3 median estimate from analysts. April's final reading was 48.1 (a reading below 50 reflects contraction).

China’s new order sub-index rose to 50.2 from 47.4 in April, the highest reading so far this year, while the new export order sub-index rose to 52.7, compared with 48.9 in April. In addition to the PMI, other tentative signs of stabilisation are emerging, partly as a result of the recent mini-stimulus measures and lower borrowing costs.

The readings suggest that downward pressure on the manufacturing sector has eased markedly, and provides further evidence that stronger external demand, along with the rebound in infrastructure investment, is helping moderate the pace of China’s economic slowdown.