China’s manufacturing sector activity unexpectedly declined in May – PMI

China’s official Manufacturing Purchasing Managers’ Index (PMI) fell to 49.5 in May from April’s 50.4, missing the forecast of 50.4 and dropping below the crucial 50 level that distinguishes growth from contraction.

The unexpected slowdown in manufacturing activity in the world’s second-largest economy for May adds to a string of negative signals, as the ongoing property crisis continues to dent business, consumer, and investor confidence.

The weak PMI figures for May reflect subdued domestic demand and contribute to a series of recent indicators suggesting that China’s economy is grappling to regain momentum, counteracting earlier optimism following better-than-expected output and trade data.

Nevertheless, economists maintain cautious optimism, hoping that the May reading is temporary and foresee potential improvement in June as new government policies, such as the property rescue plan and the issuance of special sovereign bonds, begin to take effect.