1st LD-Writethru-Economic Watch: China's manufacturing activity continues to improve as market sentiment strengthens

BEIJING, May 31 (Xinhua) -- China's manufacturing activity continued to show signs of improvement in May as production accelerated and market expectations strengthened, official data showed Saturday.

The purchasing managers' index (PMI) for China's manufacturing sector came in at 49.5 in May, up 0.5 points from April, according to the National Bureau of Statistics (NBS).

A PMI reading above 50 reflects expansion, while a reading below 50 suggests contraction.

NBS statistician Zhao Qinghe said the improvement reflects accelerated production and more positive business expectations.

The sub-index for production rose to 50.7, up 0.9 points from the previous month, indicating faster manufacturing output. The new orders index also climbed by 0.6 points to 49.8.

Notably, the PMI for large enterprises returned to expansion territory at 50.7, up 1.5 points from April, pointing to improving conditions for major firms.

High-tech manufacturing continued its expansion for the fourth consecutive month, reaching 50.9. The sub-indices for the equipment manufacturing and consumer goods sectors rose to 51.2 and 50.2, respectively.

Market expectations also improved over the period. The production and business activity expectation index rose to 52.5, up 0.4 points from the previous month, indicating that manufacturing enterprises maintain steady confidence in near-term growth prospects, Zhao said.

The continued recovery in the manufacturing PMI suggests that the effects of intensified macroeconomic policy measures are beginning to emerge, with improving business expectations and signs of recovery in production activity, analysts say.

Saturday's data also showed that the non-manufacturing PMI stood at 50.3 in May, slightly down from 50.4 in April but still in expansion territory.

The service sector maintained steady momentum, supported by holiday-related tourism and catering consumption during the May Day holiday, Zhao noted.

Looking ahead, efforts should be made to boost domestic demand and also advance high-level opening up to foster new growth in external demand, thereby reinforcing the country's economic resilience and enhancing its capacity to withstand risks, said Wen Tao, an analyst at the China Logistics Information Center. Enditem