China Manufacturing Expanded in May

China’s manufacturing expanded in May, adding to signs the world’s third-largest economy might be recovering from its slump, but growth was weak despite huge stimulus spending, according to two surveys released Monday.

Brokerage CLSA Asia-Pacific Markets said its monthly purchasing managers index rose to 51.2 from April’s 50.1 on a 100-point scale. Numbers above 50 show an expansion. The state-sanctioned China Federation of Logistics and Purchasing said its own PMI eased slightly to 53.1 from April’s 53.5 but still showed activity expanding.

“For the first time the PMI shows genuine evidence that policy really is gaining traction,” CLSA economist Eric Fishwick said in a statement.

The figures add to mounting signs that Beijing’s 4 trillion yuan ($586 billion) stimulus is starting to show results, boosting domestic demand to offset lackluster exports. Consumer spending, bank lending and investment also are up.

Economists see the PMI as a better indicator of China’s economic outlook than measures such as gross domestic product growth because it includes forward-looking elements such as new orders and exports.

The CLSA index is based on a survey of about 400 companies while the Federation of Logistics surveys about 700 companies. The CLSA index includes more private companies while the Chinese trade group surveys more government-owned enterprises.

5/31/2009 11:24 PM BEIJING (AP)