China's manufacturing activity contracts again

A key gauge of China's manufacturing activity has fallen below the boom-or-bust line for the first time in three months. Stagnant domestic demand is a major factor amid the prolonged slump in the property market.

The Purchasing Managers Index for May came to 49.5. That's down 0.9 points from last month. A reading below 50 indicates contraction.

The gauge for large companies stood at 50.7, but midsize firms were at 49.4, and small enterprises at 46.7.

The readings for non-manufacturers, such as service sector businesses, contracted 0.1 point to 51.1.

The National Bureau of Statistics conducts a monthly survey on 3,200 manufacturers to compile the index.

The Chinese government has introduced measures to revive the economy. It launched a program to urge consumers to replace old cars and household appliances. Beijing is also having local governments buy unsold homes.