China’s manufacturing activity expanded slightly in May, a private survey showed, a surprise improvement that contradicted official data showing a slump in factory output last month.
The Caixin manufacturing purchasing managers index — which covers mainly smaller and export-oriented businesses than the official PMI — rose to 50.9 from 49.5 in April, rebounding above the 50 level that separates contraction from expansion. Economists surveyed by Bloomberg had predicted the index would be unchanged.
The official manufacturing PMI released Wednesday showed a deeper contraction in factory activity in May, while the expansion in services and construction eased, sparking fears of a downward spiral in the world’s second-largest economy. While the Caixin report offers some respite for investors, the survey showed manufacturers remained gloomy about the outlook.
Compared with the PMI survey by the National Bureau of Statistics, the Caixin report compiled by S&P Global is based on a survey sample of around 650 private and state-owned manufacturers. The NBS’s manufacturing report has a sample base of 3,200 companies.
The Caixin manufacturing PMI suggests the export sector might have outperformed, said Hao Zhou, chief economist at Guotai Junan Hong Kong Ltd. “Obviously, we need more time to see whether the improvement would be sustained,” he said.
--With assistance from Yihui Xie.
