China's factory activity weakened further in May as a lack of demand suppressed the release of manufacturing capacity.
The official manufacturing purchasing managers' index (PMI) stood at 48.8 in May, down from 49.2 in April, marking the fall in three consecutive months to a new low in five months, data from the National Bureau of Statistics (NBS) showed on May 31. The 50-mark separates expansion from contraction in activities.
Subindex for new orders remained in the contraction zone at 48.3 in May, down from 48.8 a month prior. The disappointing demand dampened manufacturers' production activity, leading to a fall in the subindex of production from 50.2 to 49.6.
"The manufacturing PMI continues to remain in contraction territory, reflecting that under weak demand expectations, the industrial sector continues to reduce production and suppress inventory, particularly in the real estate sector where land acquisition and new construction remain sluggish. As a result, the demand for steel, cement, and asphalt remains sluggish," said Xu Tianchen, Senior Analyst at The Economist Intelligence Unit.
"China's economic prosperity level has receded and the foundation for recovery and development still needs to be consolidated," said NBS senior statistician Zhao Qinghe.
The official non-manufacturing PMI, which measures business sentiment in the services and construction sectors, shrunk to 54.5 in May from 56.4 in April.
The official composite PMI, which includes both manufacturing and services activity, fell to 52.9 in May, down from 54.4 a month earlier.
(Writing by Alex Guo Editing by Emma Yang)
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