PMI stability in May a sign of steady growth

The economic activities of China's manufacturing and services sectors remained stable in May despite the country's tightening of financial regulatory policies, which has caused market concerns about slowing the economy.

The official manufacturing purchasing managers index stood at 51.2 in May, which is unchanged from April. It also is the 10th consecutive month that it has been higher than the 50-point mark on the index that divides expansion and contraction, the National Bureau of Statistics said on Wednesday.

Analysts said the reading shows the economy remains resilient.

Construction remained robust - despite slowing a little bit from the previous month - thanks to a pickup in infrastructure investment that boosted demand, the bureau said.

The PMI for the services sector accelerated to 54.5 as commercial services such as retail and railway transportation expanded on rising demand, the bureau said.

The results show that the world's second-largest economy is expanding at a stable pace, said Zhang Yiping, an analyst at China Merchants Securities. "The trend of stable growth is clear."

Subindexes of the manufacturing PMI remained robust. New orders kept pace with April at 52.3, while export orders improved slightly by 0.1 percentage point to 50.7.

The production subindex eased to 53.4 from 53.8 in April, but remained well within positive territory.

"The firming subindexes show the manufacturing environment remains stable despite the country's strengthening of financial regulation to defuse potential financial risks," Zhang said.

China has been tightening controls on the financial sector since the second half of last year to prevent such potential risks as rising debt levels from worsening and possibly affecting overall financial stability. While analysts said that is necessary, it has brought concerns that it could dampen normal economic activities and be a drag on growth.

"The May PMI results show that strengthening financial regulation does not necessarily affect stable growth," Zhang said.

Although it dropped in April, the manufacturing PMI stabilized in May. "The Chinese economy is changing to a trend of stabilization from a short period of fluctuations," Zhang Liqun, an economist at the State Council's Development Research Center, said in a statement.

Another welcome sign of change reflected in the PMI is further improvement in the index for small and medium-sized enterprises, indicating the improving internal strength of the economy.

The small enterprise PMI was 51 in May, one percentage point higher than in April and the highest in two years, while that for midsized enterprises was 51.3, 1.1 percentage points higher than in the previous month.

Contact the writers at xinzhiming@chinadaily.com.cn