MNI 5 THINGS: China MAY PMI Data Shows Strong Ind. Condition

     BEIJING (MNI) - The following are our key takeaways from the official China

Manufacturing Purchasing Managers' Index (PMI) data for May, released on

Thursday by the China Federation of Logistics and Purchasing (CFLP) and the

National Bureau of Statistics. 

     - Headline manufacturing PMI accelerated to 51.9 in May from 51.4 in April.

It was also higher than the 51.2 seen last May, and came in above the 51.4

median of an MNI survey. May was the 22th consecutive month that manufacturing

data remained above 50, which divides expansion and contraction. 

     - The production index, at 54.1, increased from 53.1 in April. The

expectations index rose by 0.3 percentage points to 58.7. High-tech

manufacturing production PMI was 54.8, higher than 53.8 in April. 

***Comment: The expectations index remains at a  high level, showing the overall

sentiment is quite optimistic. That said, Zhao Qinghe, the senior actuary at NBS

said that 40.1% of the surveyed enterprises said their funding situation was

tight, with the percentage rising for consecutive three months.

     - The overall new orders index increased by 0.4 percentage points m/m to

53.8, with new export orders rising by 0.5 percentage point to 51.2.

     - Prices rose sharply. Input prices rose to 56.7 in May from 53.0 in April,

while output prices rebounded to 53.2 from 50.2 last month. ***Comment: Although

price increases reflect the healthy development of industrial companies as a

whole, the potential inflation risks need to be watched, said Chen Zhongtao, the

vice chief economist at CFLP. Meanwhile, more than 40% of companies said that

labor costs and raw material costs were high, said Zhao.

     - Services PMI rose slightly to 54.9 in May from 54.8 in April, the third

consecutive month of increase. It was the ninth straight month that the reading

stayed above 54.0, a relatively high level - showing the service sector is

sustaining strong momentum. The expectations index fell to 61.0 from 61.5 last

month, now the twelfth consecutive month that the index has come in above 60,

showing the services sector's outlook remains generally optimistic. 

--MNI Beijing Bureau; +86 10 85325998; email: he.wei@marketnews.com

--MNI Singapore Bureau; +65 8233 2326; email: Asia-Editor@marketnews.com

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