China's National Bureau of Statistics and China Federation of Logistics & Purchasing released data on May 31st, showing that the manufacturing Purchasing Managers' Index (PMI) for May was 50.0%, a decrease of 0.3 percentage points from the previous month.

The non-manufacturing business activity index and the composite PMI output index were 50.1% and 50.5% respectively, rising by 0.7 and 0.4 percentage points from the previous month, indicating that the country's overall economic output continues to expand.



The manufacturing sector maintained stable operations, with new growth drivers accelerating their expansion.

The chief statistician at the National Bureau of Statistics' Service Industry Survey Center stated that in May, the overall production and operating conditions of manufacturing enterprises remained generally stable. The production index stood at 51.2%, above the critical threshold, indicating continued expansion in manufacturing production activities. The new orders index was 49.9%, suggesting a slight moderation in market demand.



An analyst from the China Logistics Information Center noted that in May, manufacturing market demand was stable with a slight slowdown, with foreign demand showing a relatively more pronounced deceleration. The new export orders index fell by 1.7 percentage points compared to the previous month. However, supported by factors such as consumption during the Labor Day holiday, domestic demand remained stable, with the new orders index for consumer goods manufacturing operating close to 50%, indicating overall stable demand.



From the production side, the manufacturing production index has remained above 51% for three consecutive months, indicating continued expansion in enterprise production activities. However, it is important to note that while production continues to expand, the slight moderation in market demand has led to a situation of supply exceeding demand, putting some pressure on finished goods inventory and slowing down product outflows.



In May, price indices continued to fluctuate at high levels, but the pace of increase slowed. The index for purchasing prices of major raw materials and the ex-factory price index were 60.5% and 51.9% respectively, both declining by 3.2 percentage points from the previous month, yet still remaining at relatively high recent levels.



The analyst explained that the high-level slowdown in raw material price growth in manufacturing was due to two factors: first, prices of some bulk commodities like crude oil retreated from the previous month's levels; second, the steady yet slightly slower procurement activities for raw materials in China's manufacturing sector reduced the supportive effect on raw material prices. However, the purchasing price index remaining in expansion territory indicates that raw material prices continue their upward trend.



The chief statistician highlighted that in May, the development trend of new growth drivers continued to improve. The PMI for high-tech manufacturing and equipment manufacturing were 52.9% and 52.1% respectively, rising by 0.7 and 0.3 percentage points from the previous month, both consistently above the critical threshold. Notably, the high-tech manufacturing PMI has been in expansion territory for 16 consecutive months, demonstrating the sustained leading role of new growth drivers.



Overall, the analyst summarized that in May, the manufacturing PMI declined due to the pullback in external demand after a previous surge, but the manufacturing sector as a whole maintained stable operations. Positive changes were observed in production activities, market prices, and industrial structure, indicating that the economy continues to develop towards newer and superior qualities.



Non-manufacturing sector sentiment rebounded, with business activities returning to expansion territory.

In May, the non-manufacturing business activity index was 50.1%, an increase of 0.7 percentage points from the previous month, indicating a return to expansion for non-manufacturing business activities.



An analyst stated that the construction business activity index was 48.8%, up 0.8 percentage points from the previous month, reflecting an overall improvement in sentiment within the construction sector, particularly with continued expansion in infrastructure-related activities.



The analyst analyzed that with the continuous release of demand related to urban renewal and the construction of "six networks," infrastructure investment is expected to continue driving stable growth. From an expectations perspective, the business activity expectation index for civil engineering construction rose by over 4 percentage points from the previous month, exceeding 55% and reaching a new high for the year.



As policy effects in the infrastructure construction sector continue to be released and major projects accelerate their implementation, overall industry demand is expected to be effectively boosted, bringing positive impacts to enterprise operations and development.



Regarding the consumer sector, the concentrated release of consumption demand during the Labor Day holiday drove increased sentiment in related industries such as resident travel, dining, and cultural/sports leisure. In May, the business activity index for railway transport rose above 60%, the index for scenic area services rose above 50%, and the index for catering services increased by over 5 percentage points from the previous month, rising above 51%.



In May, the information services sector continued its rapid development. The business activity index for telecommunications, radio, television, and satellite transmission services remained above 55% for three consecutive months. The business activity index for internet and software information technology services increased month-on-month for three consecutive months and remained above 54% for two consecutive months.



The analyst noted that new growth driver-related industries, represented by information services, are developing rapidly, with their business activity expectation indices continuing to stay above 58%. The continuous innovation and accelerated integration in the information services sector will continue to play a key role in fostering new quality productive forces.



Overall, the analyst concluded that the sentiment level in the non-manufacturing sector improved compared to the previous month, with consumption and investment maintaining stable operations. Moving forward, as the effects of various policies are fully released and the leading role of innovation-driven development continues to be exerted, the endogenous driving forces for economic growth will further accumulate.