Data released by the National Bureau of Statistics on May 31 shows that in May, the Manufacturing Purchasing Managers' Index (PMI) stood at 50.0%, at the threshold level. The Non-Manufacturing Business Activity Index and the Composite PMI Output Index were 50.1% and 50.5% respectively, up 0.7 and 0.4 percentage points from the previous month, indicating that China's overall economic output continues to expand. Experts anticipate that as subsequent policies are further implemented and take effect, they will unlock considerable incremental growth in domestic supply and demand for the manufacturing sector. Manufacturing sector activity is expected to experience moderate expansion in June.

Manufacturing Sector Maintains Stable Overall Operation "In May, the manufacturing PMI was 50.0%, indicating that overall production and business operations of enterprises remained stable," said Huo Lihui, Chief Statistician at the Service Industry Survey Center of the National Bureau of Statistics.

Looking at the sub-indices, enterprise production continued to expand. In May, the production index was 51.2%, above the threshold level, indicating continued expansion in production activities among manufacturing enterprises. The new orders index was 49.9%, suggesting a slowdown in market demand. By industry, the production and new orders indices for sectors such as pharmaceuticals, railway, ship, aerospace and other transport equipment, and computers, communications, and other electronic equipment all exceeded 53.0%.

The development momentum of new growth drivers continues to improve. In May, the PMI for high-tech manufacturing and equipment manufacturing were 52.9% and 52.1% respectively, up 0.7 and 0.3 percentage points from the previous month, both remaining above the threshold level. Notably, the high-tech manufacturing PMI has been in expansionary territory for 16 consecutive months. These related industries maintain good growth momentum, with the leading role of new growth drivers continuing to be evident.

The PMI for large enterprises remains above the threshold level. In May, the PMI for large enterprises was 51.1%, up 0.9 percentage points from the previous month. It has remained in expansionary territory throughout the year, indicating that large enterprises continue their favorable production and business operation trend.

Price indices fluctuate at high levels. Huo Lihui stated that in May, the purchasing price index for major raw materials and the ex-factory price index were 60.5% and 51.9% respectively, both down 3.2 percentage points from the previous month. While still at relatively high recent levels, both indices have been in expansionary territory for five consecutive months, indicating a continued overall rise in market price levels for the manufacturing sector. "By industry, the two price indices for sectors such as textiles, chemical fibers, rubber and plastic products, and ferrous metal smelting and rolling processing have all been above 55.0% for three consecutive months, with overall purchase and sales prices in these related industries continuing to rise," Huo said.

Wen Tao, an analyst at the China Logistics Information Center, noted that in May, the manufacturing PMI declined slightly due to a pullback in external demand after a previous surge. However, the manufacturing sector as a whole maintained stable operation, with positive changes observed in production activities, market prices, and industrial structure, indicating that the economy continues to develop steadily, with new and improved growth drivers. "It is expected that manufacturing sector activity will expand moderately in June," Wen said. On one hand, policies aimed at stabilizing the economy and promoting growth continue to exert force. As policies related to "new infrastructure and new urbanization initiatives" and other key areas are implemented and take effect, they will unlock considerable incremental growth in domestic supply and demand for manufacturing, providing strong impetus for economic development. On the other hand, new growth drivers are expected to continue their stable and positive development trend. Overseas demand for China's equipment remains expansive, and the rapid development of artificial intelligence continues to contribute momentum to China's high-tech manufacturing. Both supply and demand for new growth drivers are expected to continue expanding relatively rapidly, providing strong support for the overall stability and growth of the manufacturing sector.

Non-Manufacturing Sector Activity Rebounds Data shows that in May, the Non-Manufacturing Business Activity Index was 50.1%, up 0.7 percentage points from the previous month, indicating a rebound in non-manufacturing sector activity.

Specifically, the Services Business Activity Index rose into expansionary territory. Huo Lihui stated that in May, the Services Business Activity Index was 50.3%, up 0.7 percentage points from the previous month, indicating increased market activity in the services sector. By industry, the business activity indices for sectors such as railway transport, telecommunications, radio, television, and satellite transmission services, and insurance were all in the relatively high expansionary range above 55.0%, with business volume growing rapidly. In terms of market expectations, the Services Business Activity Expectation Index for May was 55.4%, remaining in a relatively high expansionary range, indicating that most services enterprises are generally optimistic about near-term market development.

The Construction Business Activity Index rebounded somewhat. Data shows that in May, the Construction Business Activity Index was 48.8%, up 0.8 percentage points from the previous month, indicating improved activity levels. In terms of market expectations, the Construction Business Activity Expectation Index was 51.5%, up 1.0 percentage points from the previous month, suggesting that construction enterprises' confidence in the future development of the industry has recovered somewhat.

He Hui, Vice President of the China Federation of Logistics & Purchasing, believes that overall, non-manufacturing sector activity in May improved compared to the previous month, with consumption and investment maintaining a stable and positive trend. "On this basis, it is essential to continue fully unleashing policy effectiveness, strengthen innovation-driven leadership, focus on cultivating the endogenous drivers for investment and consumption growth, and continuously improve the quality and efficiency of economic development," He said.