China’s Manufacturing Sector Contracts in May as Caixin PMI Falls Below 50
The Caixin China General Manufacturing Purchasing Managers’ Index (PMI), a key indicator of the health of the manufacturing sector, dropped to 48.3 in May, down from 50.4 in April, according to data released on Tuesday. This marks the first time in eight months that the PMI has fallen below the 50-point threshold, signaling a contraction in activity.
Both the production index and the new orders index shifted from expansion to contraction, reflecting challenges faced by manufacturers. Wang Zhe, a senior economist at Caixin Insight Group, attributed the decline to sluggish external demand, which decreased for the second consecutive month.
“Weak global demand has put pressure on China’s manufacturing sector,” Wang said. “Companies are experiencing a drop in new orders and production output.”
Despite the downturn, the report highlighted an improvement in business sentiment. Manufacturers have become more optimistic since April, expressing hope that better trade conditions and expanding export markets will boost sales over the next year.
On the policy front, Wang emphasized the need to reassess previous measures aimed at stimulating consumption. “New steps should be taken to bolster domestic demand,” he said. “Efforts should focus on improving the employment environment, increasing residents’ disposable income, and restoring confidence to support a steady economic recovery.”
The latest data underscores the ongoing challenges in the manufacturing sector amid global economic uncertainties. As the sector navigates these headwinds, policymakers and businesses alike are looking for ways to reignite growth and ensure long-term stability.
