China’s factory activity stalled in May after two months of expansion, official data showed on Sunday, as weaker demand and rising energy costs linked to the Middle East conflict weighed on manufacturing growth.
The official manufacturing Purchasing Managers’ Index (PMI) stood at 50.0 in May, according to data released by the National Bureau of Statistics (NBS), matching economists’ forecasts in a Bloomberg survey.
The figure was down from 50.3 in April and 50.4 in March. A PMI reading above 50 indicates expansion, while a figure below that level signals contraction. The slowdown comes as disruptions to shipping through the Strait of Hormuz, a critical route for global oil and gas supplies, have pushed up energy prices and increased cost pressures on manufacturers.
Chinese factories faced rising raw material costs, particularly in the energy and chemical sectors, the NBS said.
NBS statistician Huo Lihui said supply and demand in industries including petroleum, rubber and plastics continued to show weakness.
Huo added that while overall manufacturing production and business activity remained stable, there was a slight slowdown in demand for new orders.
China’s economy has struggled with weak domestic demand and subdued investment in recent years, posing challenges for its vast manufacturing sector.
However, the non-manufacturing PMI, which measures activity in the services and construction sectors, rose to 50.1 in May from 49.4 in April, indicating a modest return to growth outside the factory sector.