China’s Factory Activity Beats Forecasts in May, Private Survey Shows Despite Softer Official Data

China’s manufacturing sector expanded at a faster-than-expected pace in May, according to a private survey released on Monday, offering a more positive assessment of factory activity than recent official data that pointed to slowing industrial momentum.

'The RatingDog China General Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 51.8 in May, slightly exceeding the 51.6 forecast in a Reuters poll. However, the reading was lower than April’s 52.2, indicating that while manufacturing activity continued to grow, the pace of expansion moderated during the month.

A PMI reading above 50 signals expansion, while a figure below that threshold indicates contraction.

Despite the slowdown from April, analysts noted that factory activity remained relatively strong by historical standards.

“While the rate of growth eased, it remained among the highest observed over the past five years,” said Yao Yu, founder of credit research firm RatingDog.

The survey highlighted mixed conditions across China’s manufacturing sector. While production and overall business activity continued to improve, export demand weakened. New export orders recorded a slight decline in May, reflecting continued pressure from global demand uncertainties.

Manufacturing employment also showed signs of strain, with the survey reporting a marginal contraction in workforce numbers as companies remained cautious about hiring.

Cost pressures, meanwhile, eased for the first time in six months. The report showed that seasonally adjusted input prices declined compared with April, although manufacturers continued to face elevated costs linked to higher raw material prices, energy expenses and supply-chain disruptions.

Despite these challenges, business confidence remained strong. Survey respondents expressed optimism about growth prospects over the coming year, citing expectations for new product launches, technological innovation and improved production capacity.

The latest private-sector survey presented a more upbeat picture than China’s official manufacturing data released on Sunday.

Official figures showed the country’s manufacturing PMI falling to 50.0 in May, down from 50.3 in April, marking its weakest level since February. The reading was in line with market expectations but underscored slowing momentum across a broader section of the manufacturing economy.

Economists noted that differences between the two surveys are common because they measure different groups of companies. The RatingDog survey focuses on a smaller sample of manufacturers, many of which are export-oriented, while the official PMI covers a wider range of businesses across China.

Analysts at Goldman Sachs said the official data pointed to “subdued manufacturing sector growth,” alongside stronger activity in the services sector and a continued downturn in construction.

The mixed manufacturing signals arrive as China’s broader economic recovery remains uneven.

Recent data showed retail sales growth slowing to its weakest pace in 40 months during April, raising concerns about domestic consumption. However, official statistics also indicated that tourism activity and holiday spending improved during the extended May Day holiday period.

According to Chinese hotel operator H World, smaller cities emerged as some of the country’s most popular travel destinations during the holiday season. Industry observers noted that lower accommodation costs in these locations likely contributed to stronger occupancy rates compared with major metropolitan areas.

While the latest private PMI suggests that parts of China’s manufacturing sector remain resilient, weaker export demand and softer official indicators continue to highlight challenges facing the world’s second-largest economy as policymakers seek to sustain growth in the months ahead.