- China's factory activity contracts in May
- Services activity growth slows in May
- Property downturn continues to weigh on domestic demand
- May data could be blip ahead of stimulus taking effect, analysts
BEIJING, May 31 (Reuters) - China's manufacturing activity unexpectedly fell in May, keeping alive calls for fresh stimulus as a protracted property crisis in the world's second-largest economy continues to weigh on business, consumer and investor confidence.
The official manufacturing purchasing managers' index (PMI) dropped to 49.5 in May from 50.4 in April, the National Bureau of Statistics (NBS) said on Friday, below the 50-mark separating growth from contraction and missing analysts' forecast of 50.4.
The disappointing number adds to a series of recent indicators showing the $18.6 trillion economy is struggling to get back on its feet, eroding earlier optimism seen after better-than-expected output and trade data.
"I think the data particularly reflects soft domestic demand, the housing sector continued to worsen and retail sales were not strong," said Xu Tianchen, senior economist at the Economist Intelligence Unit.
"I think the data particularly reflects soft domestic demand, the housing sector continued to worsen and retail sales were not strong," said Xu Tianchen, senior economist at the Economist Intelligence Unit.
The International Monetary Fund on Wednesday revised up its China growth forecast by 0.4 percentage points to 5% for 2024 and 4.5% in 2025, but warned the property sector remained a key growth risk.
China this month unveiled "historic" steps to stabilise the property market, but analysts say the measures fall short of what is required for a sustainable recovery.
The IMF said it saw "scope for a more comprehensive policy package to address property sector issues."
Nie Wen, an economist at Shanghai Hwabao Trust, said the decline reinforced the case for more support.
"There is still a need to strengthen stimulus on the demand side, while at the same time sorting the credit channels as soon as possible to avoid financial institutions' balance sheets shrinking, which would have a negative effect on the economy," Nie said.
Reporting by Joe Cash; Editing by Sam Holmes
Source: Reuters