China's manufacturing sector contracted for a third straight month in May as output shrank at the fastest rate in a year, a private survey showed on Thursday.
The HSBC flash Purchasing Managers' Index (PMI) came in at 49.1, weaker than the 49.3 print forecast by Reuters but better than the 48.9 final showing in March. A reading below 50 indicates contraction.
"Softer client demand, both at home and abroad, along with further job cuts indicate that the sector may find it difficult to expand, at least in the near-term, as companies tempered production plans in line with weaker demand conditions," said Annabel Fiddes, an economist at Markit.
"On a positive note, deflationary pressures remained relatively strong, with both input and output prices continuing to decline, leaving plenty of scope for the authorities to implement further stimulus measures if required."