China HSBC flash PMI at five-month high of 49.7, orders rebound but jobs weak

May 22 2014, 07:35 IST
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SummaryChina's factory sector turned in its best performance in five months in May, a preliminary HSBC survey showed on Thursday, though overall manufacturing growth still contracted slightly in a suggestion that the outlook remains murky.

below the government's 7.5 percent target, as long as the job market holds up.

Hit by unsteady global demand, slowing domestic investment growth and a cooling property market, China's economic growth fell to an 18-month low in the first three months of this year.

Economists polled by Reuters believe growth in the world's second-largest economy will dip to a 24-year-low of 7.3 percent this year -- just ahead of the 7.2 percent expansion that Premier Li has said is necessary for a robust labour market.

JAPAN SURVEY MIXED

Japanese manufacturing activity also contracted in May but at a slower pace than the previous month, a similar preliminary survey showed, in a sign of tentative recovery after a sales tax hike in April led to a slowdown in consumer spending.

The Markit/JMMA flash Japan Manufacturing Purchasing Managers Index (PMI) rose to a seasonally adjusted 49.9 in May from a final reading of 49.4 in April.

Unlike China, however, the index for new export orders fell to a preliminary 48.2 from a final reading of 49.1 in April.

Exports have been a soft spot for the recovering economy and policymakers have been counting on a rebound in shipments to offset the expected drop in consumer consumption in the immediate months after the sales tax increase.

But there is growing evidence that any damage from the tax hike will be limited. A Reuters survey showed companies expect sales to bounce back and are more willing to raise wages.

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