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We expected China’s manufacturing to slip into contraction in May, but things were worse than anticipated, as export orders fell sharply amid continuing U.S.-China trade-war pressures.
The official manufacturing purchasing managers index (PMI), which gives a snapshot of operating conditions in the manufacturing sector, dipped to 49.4 in May from 50.1 in the previous month, according to data released Friday by China’s National Bureau of Statistics (NBS). The reading fell short of the median forecast of 49.9 by a Bloomberg survey of economists.
A reading of 50 separates expansion from contraction. The higher the number above 50, the faster the expansion, while the further below 50, the greater the contraction. Manufacturing accounts for 30% of China’s gross domestic product.
China’s nonmanufacturing business activity index, which includes the services and construction sectors, remained at 54.3, the same as the month before, NBS data showed