Data released on May 31st shows that in May, China's Manufacturing Purchasing Managers' Index (PMI) was 50.0%, a decrease of 0.3 percentage points from the previous month. Conversely, the Non-Manufacturing Business Activity Index rose to 50.1%, marking an increase of 0.7 percentage points from April. This indicates a recovery in the non-manufacturing sector's activity level, with the service industry business activity index moving into expansionary territory and the construction industry business activity index also showing improvement.
The concentrated release of consumer demand during the May Day holiday period drove a rise in sentiment across related consumption industries. Industries related to resident travel, dining, cultural, sports, leisure, and shopping all saw improved activity levels compared to the previous month.
Resident travel boosted activity in railway transport, tourism services, and scenic spot operations. The business activity index for railway transport rose significantly month-on-month, exceeding 60%, indicating strong resident travel willingness. The business activity index for leasing and business services also increased by over 3 percentage points to above 54%, as holiday travel demand fully unleashed related leasing and business service activities. The business activity index for scenic spot services ended a two-month streak below 50%, rising above that threshold, showing increased resident activity at tourist attractions.
Furthermore, resident enthusiasm for dining and leisure entertainment remained positive. The business activity index for the catering industry rose by over 5 percentage points to above 51% compared to April. Although the index for cultural, sports, and entertainment activities declined slightly month-on-month, it remained in a high-activity zone above 55%. Additionally, holiday shopping demand saw a pickup, with the retail business activity index showing a notable increase from the previous month, approaching the 50% expansion threshold.
An expert analysis suggests that the non-manufacturing sector's activity level rebounded in May, with business activities re-entering expansion territory and a narrowing decline on the demand side. Business optimism remained stable, with the business expectations index edging up slightly from April, staying above 54% for the third consecutive month.
By sector, infrastructure-related activities maintained stable growth. Although the business activity index for civil engineering construction dipped slightly, it remained above 52%. Holiday consumption drove increased activity in resident travel, dining, and cultural/sports entertainment. The business activity indices for railway transport, scenic spot services, leasing and business services, and catering all rose to varying degrees from the previous month, all above 50%. While the cultural, sports, and entertainment index declined, it remained in a high-activity zone above 55%.
Simultaneously, industries related to new growth drivers continued robust operation, indicating strong momentum for high-quality economic development. The business activity indices for telecommunications operations and internet/software technology services both remained at high levels above 54%.
Overall, the non-manufacturing sector's activity level improved compared to April, with consumption and investment maintaining a stable and positive trend.
**Manufacturing PMI at Critical Point**
In May, the manufacturing PMI stood at 50.0%, indicating overall stable production and operation conditions for enterprises. The PMI for large enterprises was 51.1%, up 0.9 percentage points from April, having remained in expansionary territory throughout the year, continuing a favorable production and operation trend.
Among the 13 sub-indices, the backlog of orders index and the finished goods inventory index increased by 0.6 and 1.8 percentage points, respectively, compared to the previous month. The production index, new orders index, new export orders index, quantity of purchases index, imports index, input prices index, output prices index, raw materials inventory index, employment index, supplier delivery time index, and production & business activity expectation index all declined, with decreases ranging from 0.2 to 3.2 percentage points.
An analyst noted that the slight further decline in the May PMI indicates that economic growth momentum still needs strengthening. The pattern of strong supply and weak demand remains a prominent constraint on the economic recovery. To address this, more proactive and effective macroeconomic policies should build on existing efforts and be promptly reinforced. In particular, the crucial driving role of government public product investment should be fully leveraged. Support from fiscal and credit funds should be significantly increased for investment projects related to infrastructure networks and urban renewal, aiming to quickly drive a notable rebound in infrastructure investment growth. This would lead to increased enterprise orders, more active production and investment, job growth, and promote a sustained recovery in resident consumption, thereby accelerating the reversal of the supply-demand imbalance's constraint on the economic recovery.
Another expert forecast suggests that in June, manufacturing will operate with stable growth, experiencing a mild expansion in activity. As policies to stabilize the economy and promote growth continue to take effect, and initiatives like new infrastructure and network projects demonstrate results, they are expected to unlock considerable incremental domestic supply and demand for manufacturing, providing strong support for economic development and the manufacturing sector.
Furthermore, June is a peak season for infrastructure and major project commencement in China. Overseas demand for Chinese equipment remains expansive, and the rapid development of artificial intelligence continues to contribute momentum to high-tech manufacturing. The supply and demand sides of new growth drivers are expected to continue expanding relatively quickly, providing robust support for the overall stable growth of the manufacturing sector.