Chinese Manufacturers did slightly better in May, but demand from domestic and foreign market continues to remain low despite government attempts to boost the economy with a financial stimulus, according to Yahoo News.

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Bloomberg Business quoted Markit economist Annabel Fiddes who said that weak demand both within and outside China as well as the continuing layoffs is making things difficult for the Chinese factories to grow. 

The Chinese government recently released its Purchase Manager Index (PMI) which shows that the manufacturing sector achieved a 50.2 point in May in contrast to April's 50.1, as reported by Reuters.  This is seen as a positive growth albeit a very small one.

However, an HSBC/Markit survey showed that the PMI for China's small and medium manufacturing firms has contracted to 49.2 points this May. According to the unofficial survey, this particular sector has been contracting for the three months now.

Despite this discrepancy, both reports show that the indexes are still near the 50 points, which is the focal point in either growth or decline.  Above 50 points means monthly growth while a point below that means demand is on the decline.  Export forecasts continue to remain grim and this is forcing the manufacturing sector to lay-off further additional staff.       

Meanwhile, the National Bureau of Statistics reported that the PMI for non-manufacturers has declined from 53.4 to 53.2 in May.  he service sector in China had been one of the best economic performers in 2014.      

The government has slashed down interest rates thrice in the past six months since November in a bid to reverse or cushion the economic slowdown. The recent economic report will most likely prod Beijing to hand out more financial incentives.

Such financial incentives may include loosening bond sales regulations as well as ordering banks to continue giving funds to loans granted before the end of last year.

An ANZ Bank economist said that the Chinese central bank may reduce by 100 point the "reserve requirement ratio" and probably a further 25 point reduction in the interest rate.     

China Federation of Logistics and Purchasing Analyst Zhang Liqun insist that an increase in new product orders for the manufacturers will stabilize the demand and growth of the market.

TagsChinese economy news, China Manufacturing PMI, Chinese exports, China exports and imports, National Bureau of Statistics