03-Jun-2025 08:12

China's manufacturing sector saw a deterioration in operating conditions in May, according to the latest PMI data.

Manufacturing output declined alongside a renewed fall in new orders. Export orders also shrank at a faster pace. In line with reduced operations, firms cut back on their purchasing activity and lowered their staffing levels.

That said, sentiment towards future output improved, with the first rise in confidence levels in three months. Charges meanwhile continued to fall, with the rate of reduction accelerating alongside a faster decline in input costs in May.

The headline seasonally adjusted Purchasing Managers' Index (PMI) posted 48.3 in May, down from 50.4 in April.

Registering below the neutral 50.0 mark for the first time in eight months, the latest data signalled that manufacturing sector conditions deteriorated midway through the second quarter.

Central to the easing of manufacturing business conditions was the reduction in new orders. Slower inflows of new work meanwhile contributed to a further depletion of backlogged orders in May.

Stocks of finished goods accumulated for the first time in four months, albeit only slightly. Turning to prices, average input costs and output charges continued to decline midway through the second quarter of 2025.

Finally, sentiment in the Chinese manufacturing sector improved in May. Optimism picked up since April as firms grew more hopeful that trade conditions can improve and the widening of export markets will help to drive sales in the year ahead.

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