China's preliminary PMI beats expectations

Workers assemble molybdenum refining equipment at a Citic Heavy Industries Co Ltd plant in Luoyang, Henan province. Huang Zhengwei / For China Daily

A preliminary Purchasing Managers Index for China's manufacturing sector in May has beaten expectations, suggesting that the economy is stabilizing.

The PMI, released by HSBC Holdings Plc and Markit Economics, was at 49.7, exceeding the 48.3 median estimated by analysts. It was also a big rise from a final reading of 48.1 in April.

At the same time, the number remained below the expansion-contraction mark of 50. The final reading will be released June 3.

In breakdown, the new order sub-index recovered to 50.2 from 47.4 in April, the highest reading so far this year, while the new export order sub-index rose to 52.7, compared to 48.9 in April, the highest since November 2010.

The manufacturing output index came in at a four-month high of 50.3 in May, up from 47.9 in April.

Disinflationary pressure eased with output prices increasing for the fist time since last November.

But the employment index fell further to 47.3, indicating pressure on the labor market.

"Some tentative signs of stabilization are emerging," said HSBC chief China economist Qu Hongbin. "But downside risks to growth remain, particularly as the property market continues to cool."

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