Caixin’s PMI reading for the month of May has dipped below the key 50 point threshold for the first in almost a year.
On 1 June Caixin released its May PMI figure, which fell by 0.7 percentage points compared to April to hit 49.6.
This marks the first time in 11 months that Caixin’s PMI reading has dropped beneath the key 50 point level that divides positive from negative readings.
The Caixin PMI figure stands in contrast to the official reading of 51.2 for May released yesterday by China’s National Bureau of Statistics, holding steady with April and marking the tenth successive month that the government figure has remained above the boom-bust threshold.
Caixin economist Zhong Zhengsheng said that the increased pressure on the manufacturing in May essentially confirms a downward trend for the Chinese economy.
Zheng noted that the output index and the new orders index have fallen to their lowest levels since June last year, while investment and output price indices are both contracting.
The procurement inventory index also fell significantly, while finished product inventories bounced back, indicating that enterprises have switched from actively adding to inventories to passive accumulation.
While China’s manufacturers continued to increase output in May, they did so at the slowest rate in eleven months, due to want of robust growth in new orders.
Demand from overseas clients is flagging, leading to tepid growth in export sales.
Manufacturing employment levels also continued to contract, partially due to cut backs by companies as well as failure to source new staff following the voluntary departure of erstwhile employees.