China May official factory PMI seen lackluster despite stimulus moves

Thu May 28, 2015 2:48am EDT
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BEIJING (Reuters) - China's factories struggled to expand in May despite recent interest rate cuts and other policy stimulus, a Reuters poll showed, suggesting the government may have to do more to halt a protracted slowdown in the economy.

The official manufacturing Purchasing Managers' Index, or

PMI, is forecast to inch up to 50.2 from April's 50.1, according to the median forecast of 14 economists in the poll.

A reading above 50 points indicates an expansion in activity

while one below that shows a contraction on a monthly basis.

"Although the government has unveiled a series of policy stimulus measures, the effect has yet to show up," said Nie Wen, an economist at Hwabao Trust in Shanghai.

The flash HSBC/Markit PMI released last week showed factory activity contracted for a third month in May and output shrank at the fastest rate in just over a year, indicating persistent weakness in the world's second-largest economy that requires increased policy support.

The private survey focuses on small and mid-sized firms, while the official one looks at larger, state-owned companies.

China's annual economic growth slowed to a six-year-low of 7 percent in the first quarter, and recent data showed a further loss of momentum heading into the second quarter.   Continued...

A man walks past the hoarding of a construction site in Beijing December 16, 2014.
REUTERS/Kim Kyung-Hoon