China Factory Activity Tops Forecasts in May Despite Official Slowdown

CNBC reported Monday that China’s manufacturing sector expanded more quickly than analysts had anticipated in May, though the pace of improvement softened compared to the prior month.

Private Survey Clears the Bar

The RatingDog China General Manufacturing PMI, compiled by S&P Global, registered 51.8 for May. That edged above the 51.6 consensus estimate in a Reuters poll. A reading above 50 signals expansion. The April print had been stronger at 52.2, meaning momentum eased even as conditions stayed positive.

RatingDog founder Yao Yu told CNBC the pace of expansion, while slower, remained near the upper end of readings seen over the past five years. New export orders dipped slightly during the month, and factory-floor employment contracted at a marginal rate. Input costs fell on a month-over-month basis for the first time in six months, though elevated raw material prices and supply chain disruptions kept overall expenses above comfortable levels. Manufacturers still reported optimism for the year ahead, citing new product development and capacity upgrades as key drivers.

How the Two Surveys Differ

Because the RatingDog index samples a narrower pool of export-focused firms, its readings frequently diverge from China’s government-compiled PMI. The official survey spans a wider cross-section of the industrial base. China’s official manufacturing PMI fell to 50.0 in May from 50.3 in April, matching analyst expectations and hitting its lowest level since February’s contractionary reading of 49.

Official Data Paints a Mixed Picture

Goldman Sachs analysts, in a note published Sunday, characterised the official figures as pointing to subdued manufacturing growth, modest services expansion, and continued contraction in construction. That reading underscores the uneven nature of China’s economic recovery heading into the second half of 2026.

Broader Economy Remains Uneven

The factory data arrives alongside other mixed signals from the Chinese economy. Retail sales growth fell to a 40-month low in April. Domestic tourism and consumer spending did pick up during an extended May Day holiday period, though much of that activity was concentrated in lower-tier cities where room rates are typically below those in major metropolitan areas. Hotel group H World noted that the ten busiest destinations by occupancy during the break were all smaller urban centres. Investors will now look to upcoming trade and industrial output figures to gauge whether China’s recovery is gaining or losing traction into mid-year.

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