The official manufacturing Purchasing Managers' Index (PMI) for May came in at 50.0%, a decrease of 0.3 percentage points from the previous month, according to data jointly released by the National Bureau of Statistics (NBS) and the China Federation of Logistics & Purchasing (CFLP). This reading indicates the manufacturing sector is precisely at the expansion-contraction threshold.

Breaking down by enterprise size, the PMI for large enterprises stood at 51.1%, up 0.9 percentage points from April and remaining in expansion territory. In contrast, the PMI for medium-sized enterprises was 48.6%, and for small enterprises, it was 48.5%, down 1.9 and 1.6 percentage points, respectively, from the prior month, both below the 50-point threshold.

Among the five sub-indices that constitute the manufacturing PMI, only the production index remained above the 50-point mark. The new orders index, raw materials inventory index, employment index, and supplier delivery time index all fell below the threshold.

The production index was 51.2%, down 0.3 percentage points from April but still indicating continued expansion in manufacturing output. The new orders index was 49.9%, down 0.7 percentage points, suggesting a slight cooling in market demand. The raw materials inventory index was 48.6%, down 0.7 percentage points, pointing to a reduction in stockpiles of key raw materials. The employment index came in at 48.6%, down 0.2 percentage points, reflecting a slight dip in hiring sentiment. The supplier delivery time index was 49.2%, down 0.3 percentage points, indicating that delivery times from suppliers continued to lengthen compared to the previous month.

For the non-manufacturing sector, the business activity index rose to 50.1% in May, up 0.7 percentage points from April, signaling a recovery in activity levels. By sector, the construction business activity index was 48.8%, up 0.8 percentage points, while the services business activity index reached 50.3%, up 0.7 percentage points. Within the services industry, sectors like railway transport, telecommunications, broadcasting, television & satellite transmission services, and insurance reported business activity indices above 55.0%, indicating robust expansion. However, sectors such as air transport and real estate remained below the 50-point threshold.

The new orders index for the non-manufacturing sector rose to 45.0%, up 0.7 percentage points, suggesting a modest recovery in market demand. The construction new orders index was 43.5%, up 1.9 percentage points, while the services new orders index was 45.3%, up 0.5 percentage points.

The input price index for non-manufacturing rose to 52.2%, up 0.5 percentage points, indicating a continued increase in the overall cost of inputs for business operations. For construction, the input price index was 53.7%, down 1.2 percentage points, whereas for services, it was 52.0%, up 0.8 percentage points.

The selling price index for non-manufacturing was 48.8%, up 0.7 percentage points, showing that the pace of decline in overall selling prices has moderated. The construction selling price index was 48.6%, down 0.4 percentage points, while the services selling price index was 48.9%, up 1.0 percentage points.

The employment index for non-manufacturing was 45.6%, up 0.1 percentage points, pointing to a slight improvement in hiring sentiment. The construction employment index was 41.4%, up 1.8 percentage points, while the services employment index was 46.4%, down 0.1 percentage points.

The business expectations index for non-manufacturing reached 54.8%, up 0.1 percentage points, reflecting increased confidence among businesses regarding future market development. The construction business expectations index was 51.5%, up 1.0 percentage points, while the services business expectations index held steady at 55.4%, unchanged from April.

Furthermore, the composite PMI output index, which covers both manufacturing and non-manufacturing sectors, was 50.5% in May, up 0.4 percentage points from the previous month. This indicates that overall business production and operational activities in China continued to expand.