HSBC China flash manufacturing PMI extends recovery in May

China’s manufacturing sector continued to see recovery in May, with HSBC’s flash manufacturing purchasing managers’ index for the country hit a five-month high.

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The index stood at 49.7 points for May, compared with a final reading of 48.1 points in April, according to data released by the bank on Thursday May 22.

The figure was much higher than market consensus of 48.3 points but still below the crucial threshold of 50 points.

“The improvement was broad-based with both new orders and new export orders back in expansionary territory. Disinflationary pressures also eased over the month and output prices increased for the first time since November 2013,” commented Qu Hongbin, HSBC China's chief economist.

Some tentative signs of stabilizing are emerging, but downside risks to growth remain, particularly as the property market continues to cool, Qu warned.

Participants in the country’s steel market were showing mixed responses to the PMI figure.

“I think the figure itself is not strong enough to trigger any upward momentum in steel prices, unless Beijing releases more stimulus policies,” a Hebei mill source said.

Meanwhile, a Shanghai-based trader expects the market to get some support from the higher-than-expected PMI data. “The relatively positive data could provide an excuse for price increase amid the depressed market, but it’s unlikely to sustain for long as fundamentals remained weak,” he said.

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