Manufacturing stays on course
0 
China's manufacturing sector lost some growth momentum in May but was still expanding, two surveys showed yesterday.
The slowdown was largely due to a seasonal effect and tightening policies aiming at controlling the risk of an overheated economy, analysts said.
They said the figures still indicated a healthy expansion in manufacturing.
The official Purchasing Managers' Index, a comprehensive gauge of industrial activity, moderated 1.8 percentage points from a month earlier to 53.9 percent in May, the China Federation of Logistics and Purchasing said.
A reading above 50 points to expansion and it was the 15th straight month for the index to stay above that line.
A survey by HSBC showed that China's manufacturing purchasing managers' index settled at 52.7 last month, down from a revised 55.2 in April. May's reading was the lowest in 11 months.
The official PMI is weighted heavily toward big domestic companies; the HSBC survey more toward privately owned and export-oriented firms.
"The decline from April partly reflects a seasonal effect due to May 1 public holidays," said Peng Wensheng, an economist at Barclays Capital.
"It points to continued strength in manufacturing activity and rising cost pressures, but probably a moderation in the momentum of growth, reflecting the effect of policy tightening."
Indices under the official PMI showed that May's industrial output slowed down to 58.2 from 59.1 in April, while new orders eased to 54.8 from 59.3, and new export orders to 53.8 from 54.5.
Input prices fell markedly from a high level of 72.6 in April to 58.9 last month, but still suggest significant upward pressure in production costs.
"The slowdown in both manufacturing PMI readings suggests that the overheating risk is likely to ease as tightening measures filter through," said Qu Hongbin, chief economist at HSBC. "That said, we see robust economic growth without double-dip risks not least because of massive existing infrastructure investment and resilient private consumption."
China's GDP surged 11.9 percent from a year earlier in the first quarter, the fastest pace in more than two years.
