China Factory Sector Churns Out its Best Performance

China Factory Sector Churns Out its Best PerformanceThe factory sector in China has turned out its best performance for the past five months based on a recent survey by HSBC through overall manufacturing growth that is still contracted slightly which suggests that the outlook might be still shaky. From April to May the Purchasing Managers Index recovers to 49.7 with a final reading of 48.1. But data is a touch below the 50 point level that separates the monthly growth in activity in contraction which indicates that manufacturers are experiencing a small drop in businesses and still manufacturers are hoping for any signs of stabilization.

A breakdown of the results showed that a group of closely monitored indices which measures output whether domestic or foreign demand has improved substantially in May and have risen above the 50 point mark from April. Plus new export orders has showed a big turnaround in which the index has climbed 3.4 points to 52.7 a level which was not seen for almost four years. The improvements are broad based with new orders and new export orders that is back in expansionary territory. Disinflationary pressures have also eased over the month and the output prices have increased for the first time since November.

There are also tentative signs of stabilization fast emerging which is partly the result of a mini stimulus measures and lower borrowing costs. And the downside risks in the growth which remains still especially as the property market continues its cooling down, which pushed experts to asked for more policy that will place a floor under the growth.

Furthermore the employment index have fell further to 47.3 that implies to this month which has still to be filtered through the labor market.

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