China’s Manufacturing Sector Declines in May

Posted June 1st, 2011 at 12:25 am (UTC-5)
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The expansion of China’s manufacturing activity slowed in May to its lowest rate in nine months, reflecting the government’s attempts to cool the economy and slow inflation.

The China Federation of Logistics and Purchasing says its purchasing managers index, which measures the manufacturing sector, fell from 52.9 in April to 52 last month. The federation compiled the index on behalf of the government’s statistics bureau.

A separate PMI compiled by British-based HSBC showed manufacturing growth at 51.6 last month, the lowest figure in 10 months. HSBC’s PMI for April stood at 51.8.

A reading above 50 indicates an expansion in the sector.

Beijing has taken aggressive steps to rein in the red-hot economy, which triggered an inflation rate of 5.3 percent in April. The central bank has raised interest several times during the past year, and has ordered its largest banks to increase their cash reserves. The government hopes by limiting cash in the economy, it can slow inflation.

The government is reversing steps it took to boost the economy as the global slowdown took hold in 2009, including a $586 billion economic stimulus package and a record surge in lending.