China factory indicator falls in May

The latest official survey released on Friday (31st of May) revealed that factory activity in China slowed more than anticipated in May, adding further pressure on an economy already grappling with a prolonged crisis in the property industry. The manufacturing purchasing managers index from the China Federation of Logistics and Purchasing dropped to 49.5 from April's 50.4, indicating a decline in output. Weaker new orders and export orders also point to slack demand. Analysts had expected the manufacturing PMI to be just above 50, signifying expansionary territory, following the economy's faster-than-forecast annual growth of 5.3% in the first quarter of the year. However, uncertainties over access to the U.S. market have been increasing as both President Joe Biden and former President Donald Trump intensify their support for maintaining or raising trade barriers. “The latter (new orders and export orders) may point to near-term declines in exports, but it is more likely to reflect sentiment effects due to Biden’s new tariffs,” Zichun Huang of Capital Economics said in a report.