China’s private factory gauge slows as economy softens

[BEIJING] China’s manufacturing activity slowed in May, according to a private survey of export-oriented firms, in line with an official gauge that suggests the world’s second-largest economy is losing some steam.

The RatingDog China manufacturing purchasing managers index fell to 51.8 from a recent record of 52.2 in April, according to a statement released on Monday (Jun 1). That compared with the median forecast of 51.3 by economists. A reading above the 50 threshold indicates improving conditions from the previous month.

“The latest reading signalled a softer improvement in manufacturing conditions than the previous month, but remained comfortably above the long-run survey trend of 50.8 since 2004,” according to the statement. 

Official figures released on Sunday showed factory activity fell to 50 from 50.3 in April, as disruptions from a five-day break added to pressures on global demand and input costs from the continuing conflict in the Middle East.

The war in Iran is taking a toll on smaller export-oriented firms and raising their input costs. Still, tech remains a bright spot, with Goldman Sachs Group and Nomura Holdings estimating China’s overseas sales of semiconductors, computers and other products related to artificial intelligence accounted for about half of its export growth in April.

The economy, however, is showing signs of faltering after a strong first quarter. Growth slowed across the board in April, with industrial production and retail sales posting their weakest gains in years. 

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China factory activity stalls in May as demand weakens

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The surging demand for AI-related goods along with a global oil shock from the war in Iran pushed China’s export prices to rise at the sharpest pace in three years last month.

The private poll tends to reflect activity in smaller and more export-oriented firms. The RatingDog survey results have tended to be stronger than those from the official poll over the previous year amid export strength. BLOOMBERG