The government reported last week that orders for long-lasting manufactured capital goods, excluding defense and aircraft, fell in April for a third straight month.
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MIXED SIGNALS: Export orders grew faster in April, according to the ISM survey.
The non-manufacturing PMI, which is seen by the market as simply the services sector indicator, outperformed the official manufacturing PMI for May.
“The disappointing performance of manufacturing adds to suspicions that the pace of eurozone economic growth in the second quarter has cooled after a surprisingly brisk start to the year based on the latest estimate of GDP”, he added.
However, the unofficial and respected Caixin PMI found factory activity slowed once again in May, its fifteenth consecutive month of contracting activity.
A reading below 50 indicates contraction.
Manufacturing conditions in China continued to contract and dropped to its weakest level in three months while that of Indonesia remained in the expansion mode as per the PMI data released by Markit Economics on Wednesday (1 Jun).
Rob Dobson, senior economist at survey compilers Markit, said: “The manufacturing sector looks likely to act as an increased drag on the economy in the second quarter”. New orders rose at the slowest pace since last December, as client demand stayed low. In recent months the manufacturers have trimmed payrolls and cut down on raw material purchases.
The weak manufacturing performance reinforces expectations for a sharp slowdown in the wider United Kingdom economy in the second quarter, with economists pencilling in the worst performance since 2012.
“Although new orders rose further, the rate of expansion was well below the long-run survey average and new business from overseas, in fact, declined”.
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The Reserve Bank of India has lowered interest rates by 150 basis points since January 2015, including a 25-basis-point reduction at its last monetary policy review in April. Growth of preproduction inventories was only slight, while an increase in holdings of finished goods was sharp and the quickest since April 2011. In both cases, rates of growth were well below trend. “Therefore, further stimulus may be necessary to shift the economy into a higher gear”, Lima said.
