The Official NBS Manufacturing PMI in China fell to 49.4 in May 2019 from 50.1 in the previous month and worse than market expectations of 49.9. This marked the first contraction in manufacturing activity since February, amid escalating trade tensions with the US. New orders contracted for the first time in four months (49.8 vs 51.4 in April), overseas sales declined for the twelfth straight month and was at a steepest rate in three months (46.5 vs 49.2), and employment shrank further (47.0 vs 47.2). At the same time, output growth slowed to a 3-month low (51.7 vs 52.1) and buying levels grew the least since a drop in February (50.5 vs 51.1). On the price front, input prices went up at the softest rate in three months despite marking the fourth straight month of gains (51.8 vs 53.1), while output charges declined for the first time since February(49.0 vs 52.0). Finally, business sentiment softened to its lowest in four months (54.5 vs 56.5). Business Confidence in China averaged 51.85 Index Points from 2005 until 2019, reaching an all time high of 59.20 Index Points in April of 2008 and a record low of 38.80 Index Points in November of 2008.
Business Confidence in China is expected to be 50.00 Index Points by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Business Confidence in China to stand at 49.70 in 12 months time. In the long-term, the China NBS Manufacturing PMI is projected to trend around 51.00 Index Points in 2020, according to our econometric models.