(MENAFN- Gulf Times) Â China's manufacturing unexpectedly accelerated in May, indicating a slowdown in economic growth in the first quarter may be stabilising.
The Purchasing Managers' Index rose to 50.8 from 50.6 in April, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in Beijing on Saturday. That was higher than all estimates in a Bloomberg News survey of 30 analysts and compares with the median projection of 50, which marks the dividing line between expansion and contraction.
Saturday's report may provide some comfort to policy makers after the preliminary reading of a private manufacturing survey released May 23 pointed to the first contraction in seven months. Premier Li Keqiang said this week that government measures to reform the economy will be accompanied by tapered-off levels of growth and warned last month new stimulus would create risks.
"Given the mixed signals, I'd wait for the full set of activity data such as industrial production and electricity production to judge the momentum of the economy," said Zhang Zhiwei, chief China economist at Nomura Holdings in Hong Kong. "The rise of the official PMI further reduces the chance for monetary policy easing."
The statistics bureau will release May industrial output, retail sales, and inflation data on June 9 along with fixed-asset investment for the first five months of the year. The customs administration will report May trade data on June 8.
The federation and HSBC will also release non-manufacturing surveys for May next week, providing a fuller picture of an economy that's becoming increasingly reliant on service industries for growth. Both showed slower expansion in April.
President Xi Jinping said the fundamentals of the Chinese economy are "sound" and growth is on a "more stable footing," according to the English-language transcript of a written interview he gave to Latin America media released by the official Xinhua News Agency last night. "We are more interested in the quality and efficiency of economic growth rather than the speed of growth only," he said, noting that employment is stable and incomes are rising.
China's economy grew 7.8 per cent in 2012, the slowest pace in 13 years and the government in March set a goal of 7.5 per cent for this year. Last month, Premier Li warned that room for stimulus policies and government investment to meet its targets "is not big" and that such action would create "new problems and risks."
There will be no "incremental stimulus by the new government which understands the slowing potential growth and wishes to focus more on structural reforms," Lu Ting, head of Greater China economics at Bank of America in Hong Kong, said in a note on Saturday.
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