China's manufacturing sector showed signs of strain in May as the Caixin Purchasing Managers' Index (PMI) fell to 48.3, marking a 2.1 percentage point decline from April and slipping further below the 50-point threshold that separates expansion from contraction. The data, released Tuesday by Caixin Media and S&P Global, highlights challenges in domestic and international demand amid ongoing supply chain adjustments.
Key sub-indexes for output, new orders, and employment all contracted, with factory gate prices dropping for the first time in seven months. Analysts attribute the slowdown to weaker consumer spending and cautious inventory management by businesses. However, the report noted resilient business confidence, with over 60% of surveyed firms expecting output growth in the coming year.
"The manufacturing sector's performance reflects both cyclical pressures and structural shifts," said a Caixin Insight Group economist. "While short-term headwinds persist, China's push for high-tech manufacturing upgrades continues to create pockets of opportunity."
The PMI contraction comes as policymakers balance support for strategic industries with efforts to stabilize employment. Market watchers suggest the data could influence upcoming fiscal measures, particularly in green energy and advanced manufacturing sectors.
