Caixin China May manufacturing PMI rises to 50.9, first expansion in three months

Nurluqman Suratman


SINGAPORE (ICIS)–Caixin’s China manufacturing purchasing managers’ index (PMI) picked up from 49.5 in April to 50.9 in May, marking the first expansion in three months, the Chinese media firm said on Thursday.

A PMI reading below 50 indicates contraction in the manufacturing economy, while a higher number denotes expansion.

The Caixin PMI figure stood in contrast with China’s official manufacturing PMI for May which fell deeper into contraction mode at 48.8, marking a five-month low.

The Caixin PMI surveys small and medium-sized enterprises (SMEs) and export-oriented enterprises located in eastern coastal regions while the official PMI is tilted toward larger state-owned enterprises.

Production expanded at the quickest rate in nearly a year, supported by a fresh rise in overall new business amid reports of firmer client demand, Caixin said in a statement.

The rate of output growth picked up from April’s three-month low and was the best seen since June 2022.

“The subindex for total new orders recorded its second-highest reading since May 2021 as surveyed businesses reported more clients and demand, even though demand remained a bit weaker than supply,” said Wang Zhe, a senior economist at Caixin Insight Group.

External demand remained stable, with the gauge for new export orders rising marginally within expansionary territory, Wang said.

Overseas shipments of intermediate goods significantly outperformed shipments of consumer and investment products, according to Wang.

Average delivery times for inputs at Chinese factories shortened again in May due to increased capacity at suppliers and improved material availability.

However, business confidence around the 12-month outlook for output slipped to a seven-month low in May amid concerns over lingering global economic uncertainty, Caixin said.

Manufacturing employment continued to deteriorate in May, Wang noted.

“In a stark contrast to the improvements in supply and demand, the job market contracted at a faster pace in May, with the employment subindex plumbing the lowest level since February 2020,” Wang said.

“Manufacturers remained optimistic, but the reading for expectations for future output worsened in May from the previous six months, though it stayed above 50. In fact, the reading was 2.6 points below the long-term average, as manufacturers showed concern about economic uncertainty,” Wang added.

Focus article by Nurluqman Suratman


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