1) Chinese manufacturing PMI improves in May, but still contract
China’s official manufacturing purchasing managers’ index (PMI) in May improved to 49.6, compared to 48.7 expected and 47.4 in April.
However, the reading was still below the 50-point mark that separates growth from contraction.
Non-manufacturing PMI rose to 47.8 in May, vs 46.2 expected and 41.9 in April. Meanwhile, Composite PM was 48.4 vs 42.7 in April.
2) Moody’s slashes China GDP in 2022 to 4.5%
Moody’s cut China’s Gross Domestic Production (GDP) outlook for 2022 from 5.2% to 4.5%, citing disruptions caused by Covid-19 lockdowns, turmoil in the property market and geopolitical concerns, but noted that the economy could pick up in 2023 by 5.3%.
3) German and Spanish inflation in May jump
Germany’s inflation rate reached 7.9% in May as the cost of energy has noticeably increased and substantially affected the high rate of inflation, coupled with an upward effect on prices due to interruptions in supply chains caused by the Covid-19 pandemic.
Meanwhile, Spanish May inflation unexpectedly surged after a dip in April as prices other than energy and food increased at their fastest pace in two decades. Spanish consumer prices jumped 8.5% in May, compared to 8.3% expected. Core inflation rose to 4.9%.
The rise of inflation in Germany and Spain dent hopes for the Eurozone in seeing a decline in inflation while putting more pressure on the European Central Bank to act quickly. The only discussion seems to be on whether the ECB should start with a 25bp rate hike in July or 50bp.