PMI data for May likely to indicate further slowdown in Chinese economy

The Chinese government will release its official purchasing managers index for May. A private gauge for manufacturing, the Caixin PMI, also is being released. While the PMI numbers for March pointed to signs of stabilization in a steadily slowing economy, April’s numbers came in surprisingly weak.

PMI data for May are likely to show that China put an end to two-month expansion and slip into contraction in May. Data could dent market hopes that the world’s second-largest economy is reviving and weigh heavily on commodity prices.

“If the number is positive, it should help in prices as China is one of the drivers for the commodity,” CMC Markets trader Alex Wijaya told AFP.

The official manufacturing Purchasing Managers’ Index (PMI) is expected to fall to 50.0 from 50.1 in April, according to a median forecast of 31 economists polled. The Caixin PMI, which focuses on smaller companies, is likely to show factory activity shrank for the 15th straight month in May, with the headline PMI seen easing to 49.3 from 49.4 in April.

“With concerns about rising debt, we do not believe we will see massive monetary stimulus. Our view is for a further slowdown in the economy, but not a hard landing. We think China is experiencing an ongoing soft landing”, said Frederik Kunze, an economist at NORD/LB.