China manufacturing growth contracts

The flash HSBC Purchasing Managers’ Index (PMI), a measure of factory activity, for May fell to 49.6, indicating the first contraction of manufacturing growth since October, Reuters reported. That’s down from 50.4 in April with 50 marking the line between expansion and contraction, as fewer new orders caused factory activity to shrink. A sub-index measuring overall new orders dropped to 49.5, the lowest since September, showing domestic consumption’s inability to offset lower global demand. Thursday’s PMI reading, in addition to this week’s reduced China growth forecasts from global financial institutions, has cast doubt on Beijing’s 2013 growth target of 7.5%.