China official PMI hits five-month high in May, boding well for second quarter

Sun Jun 1, 2014 12:34am EDT
 
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By Aileen Wang and Matthew Miller

BEIJING (Reuters) - China's factory activity expanded at the fastest pace in five months in May due to rising new orders, official data showed on Sunday, reinforcing views that the world's second-largest economy is regaining momentum in the second quarter following Beijing's targeted measures to bolster growth.

The official Purchasing Managers' Index rose to 50.8 in May from April's 50.4, the National Bureau of Statistics said on Sunday, beating market expectations of 50.6.

"The PMI reading continued to improve in May, indicating that a trend of economic stabilization is becoming more evident," Zhang Liqun, a researcher at the Development Research Centre said in the statement accompanying the data.

As one of the first leading indicators gauging economic momentum, the improved reading could bode well for other May data, bolstering market expectations that the economy is regaining some strength as the government's pro-growth measures started to kick in.

The official survey showed a broad-based recovery in manufacturing activity in May, with nine out of the 13 sub-indicies pointing to improvement from the previous month.

A sub-index for new orders, a measure of foreign and domestic demand edged up to 52.3 in May from 51.2 in April, marking the highest level since last November.

The PMI data also showed export orders inched higher to 49.3 in May from 49.1 in April, though the indicator remained below the 50-level threshold that separates growth from contraction.

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A labourer paints antirust oil on vehicle at a factory in Wuhan, capital of central China's Hubei province January 26, 2007. China's economy grew 10.7 percent in 2006, the fastest rate since 1995, as investment and exports powered ahead despite a raft of government curbs to keep the pace of expansion in check. CHINA OUT REUTERS/Stringer (CHINA) - RTR1LMUF