Overview
- China's official National Bureau of Statistics manufacturing PMI registered 50.0 in May, a reading that sits on the boundary between expansion and contraction and signals stalled factory activity.
- A private RatingDog/S&P Global survey showed manufacturing activity remained expansionary at 51.8 in May, reflecting stronger readings among smaller private firms and continuing inventory builds.
- New orders fell in May with new export orders dropping to 48.6, a clear sign that external demand for Chinese consumer goods is weakening and may drag on output going forward.
- Surging energy and raw material costs linked to the Middle East war and the effective closure of the Strait of Hormuz pushed input-price inflation to multi-year highs, lengthened supplier delivery times, and squeezed factory margins.
- The mix of fading stockpiling, sector divergence with high-tech and equipment outperforming while energy‑intensive industries contract, and weaker domestic consumption creates a policy dilemma for Beijing and central banks abroad about balancing inflation risks with slowing demand.