Asia Pacific Economic Research-China:May manufacturing PMI remained stable at 50.1

The May NBS manufacturing PMI remained stable at 50.1, following the modest decline of 0.1-pt in April and the notable 1.2-pt gain in March, staying above the 50-threshold for the third consecutive month. Meanwhile, the non-manufacturing PMI eased moderately by 0.4-pt to 53.1. Overall, while China’s activity and survey data have been rather volatile lately, we tend to look through the monthly volatility, and expect manufacturing activity to return to some decent growth in May and June (with IP growth returning to average 0.6% m/m sa pace). China’s May manufacturing PMI compiled by the NBS and the China Federation of Logistics and Purchasing stayed unchanged at 50.1 (J.P. Morgan: 49.8; consensus: 50.0), following the modest decline of 0.1-pt in April and the notable 1.2-pt increase in March. This is the third consecutive month that the NBS manufacturing PMI stays above the 50-threshold since last August. Details in the May NBS manufacturing PMI showed mixed performance in the major components, with modest gain of 0.1-pt in output (registering at 52.3 in May, the highest reading since September last year), while new orders fell moderately by 0.3-pt to 50.7 and new export orders fell modestly by 0.1-pt to 50.0. Separately, May Caixin (Markit) manufacturing PMI eased modestly by 0.2-pt to 49.2 (J.P. Morgan and consensus: 49.2). The easing in the detailed components was rather broadly-based across output (-0.1pt), new orders (-0.3-pt) and new export orders (-0.9pt). In addition, the May NBS non-manufacturing PMI eased moderately again to 53.1, compared to the April reading of 53.5.