Manufacturing Slows As Economy Moderates Growth Rate

Manufacturing increased more slowly than expected in May, according to the latest Purchasing Managers Index, prompting fears that China’s economy overall may be moderating its growth rate. That should come with our customary warning about not putting too much store in one month’s figures, especially as manufacturing output usually slows in May, but we did note earlier that PC sales were weakening and that the Labor Day holiday had seen lackluster retail sales for phones and TVs, suggesting that inventories are starting to back up.

At the same time, real estate property sales n Beijing, Shanghai and Shenzhen are down, too, suggesting that the crackdown on property speculation is taking effect. All of which, in turn, suggests there will be no urgency among policymakers to raise interest rates or let the yuan appreciate against the dollar.

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