China's May manufacturing PMI rises to 50.8

China's Purchasing Managers' Index (PMI) for the manufacturing sector rose to 50.8 percent in May from 50.6 percent in April, data from the China Federation of Logistics and Purchasing (CFLP) showed Saturday. May marked the eighth consecutive month that the PMI figure stayed above 50 percent, the line demarcating expansion from contraction, according to a statement from the CFLP. A modest rise in the May PMI and steady sub-indices suggest that the recovery trend in China's economy has become more obvious, said Zhang Liqun, an analyst from the Development Research Center of the State Council. According to the CFLP, the sub-index for production moved up from 52.6 percent in April to 53.3 percent in May. The sub-index was a major driver of the May PMI and represents expanding output. Orders received by manufacturers picked up in May, as the sub-index for new orders edged up 0.1 percentage point from the previous month to 51.8 percent. After tumbling 10.5 percentage points to drop below the 50-percent line in April, the sub-index for the purchasing prices of raw materials rebounded 5 percentage points to 45.1 percent in May, indicating improved market expectations, according to Zhang. The sub-index for inventories of raw materials edged up 0.1 percentage point from the previous month to 47.6 percent in May, but still marked the fourth consecutive month of shrinking stocks. However, the sub-index for inventories of finished goods went up along with the figures for purchasing prices and purchasing quantity, showing positive stock adjustments and providing room for economic recovery at large, according to the CFLP. The CFLP data also shows that the employment sub-index for May declined 0.2 percentage point to 48.8 percent, indicating job cuts, while the sub-index for supplier delivery times stood unchanged at 50.8 percent.P The official PMI, based on a survey of purchasing managers from 3,000 companies across 21 industries, diverged from the HSBC's flash PMI reading issued last week. HSBC said the PMI for China's manufacturing sector dropped to 49.6 points in May, sinking below the 50-point line for the first time in seven months. The bank's final reading is scheduled to be released on Monday. The flash reading renewed concerns over insufficient momentum for China's economic rebound, as the country's growth unexpectedly slowed to 7.7 percent in the first quarter of 2013, down from 7.9 percent during the final quarter of 2012. So far, this year's PMI figures have shown that the economy is on track for restructuring with a solidified foundation and conditions necessary for economic growth, the CFLP said. According to the federation, 42.7 percent of companies surveyed in May still reported a shortage of orders. The CFLP also warned that high-energy-consuming sectors are showing signs of expanded production. The PMIs for large and medium-sized companies both picked up in May and remained steadily above 50 percent, whereas the index for small enterprises pared 0.3 percentage point to 47.3 percent, the CFLP added, calling on policy makers to lend their support to smaller industry players. Meanwhile, the business outlook sub-index came out 3 percentage points lower month on month at 56.3 percent, meaning fewer manufacturers were optimistic about business activity in the coming three months. The CFLP also noted that the PMIs for the country's central and western regions have shown a downward trend over the past two months, heightening the need for stronger growth momentum in those regions. Zhang Liqun, the analyst, attributed the drop in central China's PMI to structural adjustments and economic upgrading. "The influence of economic restructuring will become more visible in the future, but uncertainties facing China's economic growth cannot be neglected," the analyst said.