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China's Factory Activity Stalls in May; Services Activity Rebounds

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China's Factory Activity Stalls in May; Services Activity Rebounds

China's manufacturing sector slowed down in May, while the services sector staged a recovery, helping overall private-sector activity rise last month, according to official data released Sunday by the National Bureau of Statistics.

The official purchasing managers' index fell to a neutral 50 from 50.3 in April, marking the lowest in three months. It also came in lower than the 50.2 consensus estimate from Investing.com.

A reading above 50 means growth, while a reading below 50 indicates contraction.

The production sub-index came in at 51.2, down from 51.5 in April, indicating that manufacturing output continued to expand, albeit at a softer pace. However, demand showed signs of softening, with the new orders index falling to 49.9 from 50.6 in April, suggesting a slight decline in demand within the manufacturing sector.

The data also pointed to a divergence between large and smaller firms, with the PMI for large enterprises rising to 51.1 from 50.2, while the PMIs for medium and small enterprises both fell to contraction territory at 48.6 and 48.5 from 50.5 and 50.1, respectively, in April.

Input costs remained elevated in May, despite easing slightly, with the raw materials purchase price index falling to 60.5 from 63.7 the previous month. The factory price index also softened to 51.9 in May from 55.1 previously.

Meanwhile, services activity in China recovered in May, with the official non-purchasing managers' index rising to 50.1 from 49.4 in April.

The latest reading in the index, which measures activity in the services and construction sectors, is higher than the 49.5 consensus estimate on Investing.com.

Activity within the construction sector contracted for the fifth straight month in May, with the sub-index rising to 48.8 from 48 in April. Elsewhere, railway transportation, telecommunications and broadcasting, and insurance all posted PMIs above 55, while air transportation and real estate remained below the critical threshold.

New orders in the non-manufacturing sector continued to contract in May, but at a softer rate compared with April.

China's composite PMI output index, which combines manufacturing and non-manufacturing activity, rose to 50.5 in May from 50.1 in April.

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