China’s Manufacturing Sector Likely continued to Face Difficulty

China will release the official manufacturing PMI for May on 1 June. The reading is expected to have declined to 49.9 from 50.1 in April on prolonged weak demand. The ongoing housing market correction and slow infrastructure investment growth likely weighed on production. External demand remained soft, and industries with overcapacity and high leverage remained under pressure. Standard Chartered says that their May SME survey showed that destocking continued and that the pick-up in activity after the Lunar New Year holiday was losing steam. “We expect the overall reading to show that underlying growth momentum remained weak in May. We also expect further policy easing, including an RRR cut and fiscal policy support, which will likely boost credit growth and increase manufacturing activity in Q3”,said Standard Chartered in a report on Friday.

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