China’s manufacturing sector continued to shrink in May, according to preliminary data released Thursday.
HSBC’s Flash Purchasing Managers’ Index fell to 48.7 in May from 49.3 the previous month. Any reading below 50 indicates the manufacturing sector has been shrinking.
While the news comes as yet another sign of weakness for China, the outlook for the world’s second largest economy is still far from clear.
Mark Williams, chief Asia economist for Capital Economics, said the latest PMI report seems to indicate a slowdown in China’s gross domestic product, the broadest measure of the economy. He said it also runs counter to other reports showing that income is growing for urban households and migrant workers.
“This weak PMI reading, and the general climate of economic uncertainty, suggests that a pickup in consumer spending growth is unlikely to lift the economy out of its current malaise,” said Williams, in a research note.
But he believes the economy could gain steam going forward, with a boost from the government.
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