Data released on May 31 by the National Bureau of Statistics Service Industry Survey Center and the China Federation of Logistics & Purchasing shows that in May, the Manufacturing Purchasing Managers' Index (PMI) stood at 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 overall output of China's economy continues to expand.
Manufacturing remains stable with new growth drivers accelerating expansion. "In May, the production and operational conditions of manufacturing enterprises generally remained stable. Among these, the production index was 51.2%, above the threshold, indicating that manufacturing production activities continue to expand; the new orders index was 49.9%, showing a slight slowdown in market demand," said a chief statistician.
An analyst from the China Logistics Information Center stated that in May, manufacturing market demand was stable with a slight moderation, with a relatively prominent slowdown in foreign demand, as 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 May Day holiday, domestic demand was released steadily. The new orders index for consumer goods manufacturing operated near the 50% level, indicating overall stable demand.
"From the production side, the manufacturing production index has been operating above 51% for three consecutive months, indicating continued expansion in enterprise production activities. However, it should be noted that while production continues to expand, due to a slight moderation in market demand, an oversupply has emerged, putting some pressure on finished goods inventory and slowing down product outflows," the analyst added.
In May, price indices continued to fluctuate at high levels but showed a moderated growth trend. The main raw material purchase price index and the ex-factory price index were 60.5% and 51.9%, respectively, both falling by 3.2 percentage points from the previous month but remaining at relatively high recent levels.
The analyst explained that the slowdown in the growth of raw material prices in manufacturing is due to two factors: first, prices of some bulk commodities like crude oil have declined from the previous month; second, raw material procurement activities in China's manufacturing sector have stabilized with a slight slowdown, reducing support for raw material prices. However, the purchase price index remains in expansionary territory, indicating that raw material prices continue to rise.
"In May, the development momentum of new growth drivers continued to improve. The PMI for high-tech manufacturing and equipment manufacturing was 52.9% and 52.1%, respectively, up 0.7 and 0.3 percentage points from the previous month, both remaining above the threshold. Notably, the high-tech manufacturing PMI has been in expansionary territory for 16 consecutive months, highlighting the sustained leading role of new growth drivers," said the chief statistician.
The analyst concluded that overall, while the manufacturing PMI declined in May due to a pullback in foreign demand after a previous surge, the manufacturing sector as a whole remains stable. Positive changes are observed in production activities, market prices, and industrial structure, indicating that the economy continues to develop towards new and superior directions.
Non-manufacturing sector sees a recovery in sentiment, with business activities returning to expansionary territory. In May, the Non-Manufacturing Business Activity Index was 50.1%, up 0.7 percentage points from the previous month, indicating that non-manufacturing business activities have returned to expansionary territory.
"The Business Activity Index for the construction industry was 48.8%, an increase of 0.8 percentage points from the previous month, showing an overall improvement in sentiment levels in the construction industry, particularly with continued expansion in infrastructure-related activities," said another analyst from the China Logistics Information Center.
The analyst noted that as demand related to urban renewal and the construction of the "six major networks" continues to be released, infrastructure investment is expected to continue driving stable growth. In terms of expectations, the business activity expectation index for the civil engineering and construction industry rose by over 4 percentage points from the previous month, exceeding 55% and reaching a new high for the year.
"As the effects of policies 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," the analyst added.
Regarding the consumer sector, the concentrated release of consumption demand during the May Day holiday boosted sentiment in industries related to residents' travel, dining, and cultural and sports leisure activities. In May, the Business Activity Index for the railway transportation industry rose above 60%, the Business Activity Index for scenic area services rose above 50%, and the Business Activity Index for the catering industry 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 the telecommunications, radio, television, and satellite transmission services industry remained above 55% for three consecutive months; the Business Activity Index for the internet, software, and information technology services industry rose month-on-month for three consecutive months and remained above 54% for two consecutive months.
"New growth driver-related industries, represented by information services, are developing rapidly. The business activity expectation index for these industries continues to remain above 58%. The continuous innovation and accelerated integration in the information services sector will continue to play a key role in cultivating new quality productive forces," the analyst said.
The analyst summarized that overall, 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 effectiveness of various policies is fully unleashed and the leading role of innovation-driven development continues to play out, the endogenous momentum for economic growth will further accumulate.