The manufacturing Purchasing Managers' Index (PMI) for May, released by China's Caixin Media, has returned to contraction mode for the first time in eight months due to the shock of the U.S.-China trade conflict.
According to Caixin and Reuters on the 3rd, last month's manufacturing PMI recorded 48.3, a drop of 2.1 points from the previous month (50.4). It fell below the baseline (50) for the first time since September of last year.
The market expectation (50.7) was also significantly missed. This is the lowest level in 32 months since September 2022.
It was also lower than the May manufacturing PMI of 49.5 released by China's National Bureau of Statistics on the 31st of last month. The statistics bureau's PMI continued its contraction for two consecutive months despite the easing of the U.S.-China trade dispute.
The PMI is a leading economic indicator calculated based on surveys of purchasing managers in corporations. A value above 50 indicates economic expansion, while a value below 50 indicates contraction.
Reuters analyzed that the May Caixin manufacturing PMI shows that the high tariffs from the United States have begun to hit the manufacturing powerhouse of China in earnest.
According to Caixin, the new export orders index has fallen for two consecutive months. The decline in May was the largest since July 2023. The overall new orders index also dropped to its lowest level since October 2022.