Data released on May 31 shows China's official manufacturing Purchasing Managers' Index (PMI) for May was 50.0%, down 0.3 percentage points from the previous month, indicating the sector is at the threshold between expansion and contraction. The non-manufacturing business activity index, however, rose to 50.1%, an increase of 0.7 percentage points from April, signaling a recovery in the service and construction sectors. The composite PMI output index stood at 50.5%, up 0.4 percentage points, suggesting overall business production and operation activities continued to expand.

In the manufacturing sector, the PMI reading of 50.0% places it precisely at the critical point. Analysis by enterprise size reveals a divergence: large enterprises saw their PMI rise to 51.1%, up 0.9 percentage points and remaining in expansion territory. In contrast, medium and small enterprises recorded PMIs of 48.6% and 48.5% respectively, down by 1.9 and 1.6 percentage points, both below the 50-point mark.

Among the five sub-indices that constitute the manufacturing PMI, only the production index remained above 50.0% at 51.2%, though it fell by 0.3 percentage points, indicating continued expansion in manufacturing output. The new orders index dropped to 49.9%, down 0.7 percentage points, reflecting a cooling in market demand. The raw materials inventory index declined to 48.6%, down 0.7 percentage points, pointing to a reduction in stockpiles. The employment index edged down to 48.6%, a decrease of 0.2 percentage points, suggesting a slight pullback in manufacturing hiring. The suppliers' delivery times index fell to 49.2%, down 0.3 percentage points, indicating longer delivery times from suppliers compared to the previous month.

The non-manufacturing sector showed signs of improvement. The business activity index climbed to 50.1%. By industry, the construction sector index rose to 48.8%, up 0.8 percentage points, while the services sector index increased to 50.3%, up 0.7 percentage points. Within services, industries like railway transport, telecommunications, and insurance reported business activity indices above 55.0%, indicating strong growth, whereas air transport and real estate sectors remained in contraction territory.

Key non-manufacturing sub-indices showed mixed trends. The new orders index rose to 45.0%, up 0.7 percentage points, signaling a recovery in demand. Input prices increased to 52.2%, up 0.5 percentage points, indicating rising costs for businesses. Sales prices improved slightly to 48.8%, up 0.7 percentage points, though still in contraction, suggesting a narrowing decline in selling prices. The employment index saw a marginal improvement to 45.6%, up 0.1 percentage points. The business expectations index strengthened to 54.8%, up 0.1 percentage points, reflecting growing confidence among non-manufacturing firms about future market development.

The composite PMI output index, which encompasses both manufacturing and non-manufacturing activity, registered 50.5% in May, a 0.4 percentage point increase from April. This indicates that overall business production and operational activities in China continued to expand during the month.