2nd LD-Writethru-China Focus: China's manufacturing sector growth steady in May

China's manufacturing sector expansion remained steady in May, the third month of expansion in a row, official data showed on Wednesday.

The purchasing managers' index (PMI) for May came in at 50.1, the same as in April, according to the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing.

A reading above 50 indicates expansion, while a reading below 50 reflects contraction.

NBS statistician Zhao Qinghe said the country's manufacturing activity maintained steady growth last month, partly due to expansion of high-technology manufacturing and consumer goods manufacturing.

High-technology manufacturing PMI hit 50.8 and consumer goods manufacturing PMI stood at 51.5.

The NBS highlighted computers, automobiles and consumption-related sectors as the bright spots this month.

By component, the output sub-index stood at 52.3, slightly up from 52.2 a month earlier, and higher than the first quarter's average of 51.3.

The sub-index for new orders settled at 50.7, slightly lower than 51 in the previous month but remaining in expansion territory for a third month, indicating steady market demand.

The employment sub-index ticked up 0.4 to 48.2, indicating the manufacturing firms were employing fewer people, but the rate of decrease narrowed in May.

"The PMIs in May showed further stabilization in the manufacturing sector. Although new orders softened marginally, this to some extent reflects the weakness in external demand. Domestic demand likely held up relatively well, with signs of faster purchases of intermediate goods as well as re-stocking," said a research note from HSBC.

The Caixin PMI, an indicator of factory activity based on a private survey, showed a similar picture, although it registered a larger fall in export orders, which weighed on the headline index, the HSBC note said.

But Nomura Securities believes the unchanged official PMI contrasts with other leading indicators, including the May Caixin PMI, adding uncertainty to the growth outlook.

The Caixin PMI declined by 0.2 to a three-month low of 49.2 in May.

Meanwhile, the official PMI for the non-manufacturing sector came in at 53.1 in May, down from 53.5 in April and 53.8 in March.

Although the official non-manufacturing PMI was weaker due to financial market volatility, construction was stronger over the month.

"At the current juncture, [construction] is far more important for economic activity. We had noted earlier that financing for infrastructure investment was quite strong throughout April and May. So a stronger construction activity index could suggest that the financing has helped support infrastructure investment on the ground," said the HSBC note. Endi