China manufacturing rebounds in May

Manufacturing activity in China unexpectedly rebounded in May from the previous month, official data showed on Saturday, pointing to a stabilisation in the world's second largest economy. The purchasing managers' index (PMI) grew to 50.8 in May, from 50.6 the month before, according to the National Bureau of Statistics. The PMI is a widely watched indicator of the health of the Chinese economy, with a reading above 50 indicating expansion while anything below that pointing to contraction. The reading was higher than an average forecast of 49.8 by analysts polled by Dow Jones Newswires. "The modest rise of the manufacturing PMI shows that the economy has been stabilising," said Zhang Liquan, an analyst with CFLP, the firm that compiles the index for the statistics bureau. Manufacturing had slowed in April from 50.9 in March but still showed expansion with May's figures indicating an eighth consecutive month of increasing manufacturing activity. British bank HSBC, whose own PMI survey focuses more on smaller enterprises, said last week that its preliminary manufacturing index for May fell to 49.6 from a final 50.4 in April. It was the lowest figure since October's 49.5, according to the bank's data, and the first time it had been below 50 since then. HSBC's final figure for May is due out on Monday. China's economy expanded 7.8 percent in 2012, its slowest pace for 13 years, in the face of weakness at home and in key overseas markets. Analysts had hoped the economy would rebound this year and drive growth globally after expansion of 7.9 percent in the last three months of 2012, snapping seven straight quarters of slowing expansion. But the government in mid-April announced a surprisingly weak economic growth rate of 7.7 percent for the first quarter, below market expectations and fuelling fears the recent pick-up is faltering. The International Monetary Fund this month cut its 2013 growth forecast for China to "around 7.75 percent", while Beijing in March kept its growth target for 2013 at 7.5 percent, unchanged from last year.