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Chinese Factory Sector Recovery Stalling?

The latest Chinese manufacturing PMI was released this week by the Chinese national statistics agency.

The data showed that activity in the factory sector barely managed to remain in positive territory last month, falling back to 50.6 from the prior month’s 50.8 reading.

The result was also below the forecast of 51.1.

The data poses questions about the health of the recovery in China. The factory sector was quick to rebound off the record lows posted in February, recovering immediately in March. However, data readings in both April and May have slipped lower back towards the neutral 50 level.

Most worrying is the breakdown of the data which shows the employment sub-index declining. The sub-index fell from 50.2 last time around back into contractionary territory at 49.4.

This data, which comes on the back of China recently confirming its first-ever quarterly contraction in growth, raises the risks of a similarly subdued reading for Q2.

China was...

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