Manufacturing activity slows throughout May
Manufacturing conditions deteriorated in May.
The stats bureau (NBS) and Caixin released May PMI data on Saturday and Tuesday, respectively.
- The Caixin PMI dropped to 48.3 – the lowest reading since September 2022 – down from 50.1 in April.
- The NBS PMI rose to 49.5, up from 49.0 the previous month.
ICYDK: Headline PMI figures reflect month-on-month changes in overall manufacturing conditions, where readings above 50 signal improvement and below 50 indicate deterioration.
Falling demand for manufactured products drove May’s poor PMI readings.
- The domestic and foreign orders sub-indexes were in contractionary territory across the NBS and Caixin PMIs.
The economic pain wasn’t evenly spread:
- In the NBS print, large manufacturers scored an average PMI of 51.5, while medium and small manufacturers scored 47.5 and 49.3, respectively.
But factory prices declined across the board.
- The purchasing price sub-indexes for both the NBS and Caixin surveys indicated deterioration.
Our take: Don’t panic. May’s disappointing PMI readings follow a solid run of stronger-than-expected manufacturing activity, and one weak print doesn’t signal a trend reversal.
- The divergence in PMI readings between large and small firms suggests that May’s manufacturing weakness isn’t systemic.
- Plus, given the recent reprieve in US tariffs, China’s exports to the US are likely to rebound this month – benefiting small and medium-sized manufacturers in particular.
