China’s manufacturing index drops into negative territory in May as economic pressures mount
- The manufacturing purchasing managers’ index (PMI), a gauge of sentiment among factory operators, fell to 49.4 in May
- This was a decrease on April’s performance of 50.1, and below the median expectations of a poll of Bloomberg analysts, which had predicted a drop to just 49.9
China’s manufacturing purchasing managers’ index fell further in May, suggesting the economy is continuing to slow amid the escalating trade war with the United States.
The 49.4 reading was the lowest since February’s 49.2.
Non-manufacturing PMI, which covers the services and construction sectors, remained the same as last month at 54.3, in line with the expectations of the Bloomberg poll.
“The fall in the headline index was mostly driven by weaker new orders. Export orders dropped back particularly sharply, which suggests that [US President Donald] Trump’s latest tariff hike may already be undermining foreign demand,” said Julian Evans-Pritchard, senior China economist at Capital Economics.
“Stocks of raw materials continued to decline, reversing the build-up of inventories ahead of the 1 April VAT cut that helped to temporarily boost output in March.”
The composite PMI, which combines both manufacturing and services activity, was 53.3 in May, a slight decrease on 53.4 a month earlier.