Caixin China manufacturing PMI tips into decline in May

Factory activity in China's manufacturing sector tipped into decline last month, according to the most widely-followed survey tracking the sector's health.

Caixin's non-official manufacturing sector purchasing managers' index fell from a reading of 50.3 in April to 49.6 for May.

After having pointed to slower activity over the prior two months, the gauge was now indicating an outright contraction.

May's print was also at odds with the results of an 'official' survey published the day before whose headline index had held steady at 51.2.

For Julian Evans-Pritchard at Capital Economics the Caixin PMI was the more reliable of the two and consistent with its broader outlook for the country's economy and recent declines in the prices of industrial metals.

"We have long been warning that the rebound in growth during the second half of last year would prove short-lived."

In fact, if one tried to adjust for the higher weighting of larger firms in the official measure then the disparity between the two PMIs became even wider, he said.

However, writing the day before Louis Kuijs at Oxford Economics expoused a more optimistic view.

"The risk of an excessive monetary tightening leading to sharply lower economic growth is low. The senior leadership does not want it. [...] We continue to expect a gradual slowdown in growth of both credit and GDP in the rest of 2017 which should not impinge on global growth too much."