China's manufacturing sector witnessed accelerated growth in May, as indicated by the latest Caixin survey which reported a manufacturing PMI of 51.7. This is an increase from April's 51.4, further distancing itself from the critical 50-point threshold that demarcates expansion from contraction.
Manufacturing production surged at its fastest rate since June 2022, with significant contributions from the consumer segment reporting pronounced output growth. This surge was driven by an increase in new work orders, bolstered by stronger demand both domestically and internationally. Heightened interest in new products also contributed to the rise in new orders, as per feedback from industry panelists.
Although the pace of new order expansion slightly decelerated compared to April, purchasing activity saw a notable increase in May. Companies ramped up their procurement of inputs to meet ongoing production needs and in anticipation of future output growth, leading to a rise in stockpiling for safety purposes.
Conversely, inventory levels of finished goods contracted in May, a development attributed to a spike in outbound shipments aimed at fulfilling existing orders. Additionally, the supply chain saw improvements with reduced lead times for input deliveries for the third consecutive month.
