China manufacturing gauge signals further economic stabilisation: PMI

[BEIJING] China's official factory gauge remained above the dividing line that signals improving conditions for a third month, adding to recent evidence of stabilisation in the world's second-largest economy.

The manufacturing purchasing managers index stood at 50.1 in May, the nation's statistics agency said Wednesday, matching April's level and beating the median estimate of 50 in a Bloomberg News survey of economists. The non-manufacturing PMI was at 53.1 compared with 53.5 in April. Numbers above 50 indicate improving conditions.

Fresh signs of resilience will be welcome for policy makers, after weak April readings raised concerns that a first-quarter stabilisation was faltering. Policy makers are striving to keep economic growth above 6.5 per cent this year while keeping a lid on debt and cutting excess capacity in industries like coal and steel.

"The Chinese economy looks steady in May," Larry Hu, Hong Kong-based head of China economics at Macquarie Securities Ltd, said in a note before the release.

"Economic data is largely in line with the government's growth target for this year. As such, policy stance will likely stay put and the chance of a near-term interest rate cut is very limited."

BLOOMBERG