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China’s factory activity indicates slower growth

BEIJING — An official gauge of China’s factory activity dropped in May for a second straight month as the coronavirus pandemic curbed demand.

The official manufacturing purchasing managers index edged down to 50.6 in May from 50.8 in April, the National Bureau of Statistics said Sunday. Still, the index remained above the 50 mark that separates month-on-month expansion of activity from contraction.

Economists polled by The Wall Street Journal had expected the May reading to rise to 51.5. Purchasing by manufacturers is a leading indicator of business activity because factories buy supplies in anticipation of demand.

The production subindex fell to 53.2 from 53.7 in April. The overall new orders subindex rose to 50.9 from 50.2.

Despite some improvement in new orders, overseas demand continued to contract as the Covid-19 pandemic and the global economic situation remained “severe and complicated,” Zhao Qinghe, an analyst with the statistics bureau, said in a statement accompanying the data release.

The new-export-orders subindex, a gauge of external demand, climbed to 35.3 in May from 33.5 in April. The subindex measuring imports increased to 45.3 from April’s 43.9.

The index is compiled based on monthly surveys of 3,000 manufacturers across 31 sectors.

–Liyan Qi

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