Ugly number this one. A big, big miss.
China Caixin May 2025 Manufacturing PMI 48.3, lowest since September 2022 and the first contraction in eight months
- expected 50.7, prior 50.4
Over the weekend we had an improving, though still in contraction, official manufacturing PMI:
The private-survey Caixin manufacturing PMI is awful though. China’s manufacturing activity weakened sharply in May, with the Caixin Manufacturing PMI falling to 48.3 — its lowest since September 2022 and the first contraction in eight months. Dr. Wang Zhe of Caixin Insight noted that both supply and demand deteriorated amid worsening market conditions:
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Output & Orders: Manufacturing output and total new orders both contracted, with export orders falling to their weakest since July 2023. Investment goods saw the steepest declines.
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Jobs: Employment shrank at an accelerated pace, especially among producers of investment goods.
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Prices: Input and output prices dropped further, reflecting weak demand and falling raw material costs. May marked the sixth straight month of output price contraction.
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Logistics & Inventory: Supplier deliveries faced slight delays, but inventories remained stable as companies cut back on purchases.
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Outlook: Business confidence improved slightly, with firms more hopeful about external conditions, including easing U.S.-China trade tensions.
Dr. Wang warned that downside risks to the economy have intensified in Q2, and existing stimulus measures appear insufficient. He called for targeted efforts to raise household incomes, boost employment, and improve consumer confidence to support recovery.
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The two PMIs are quite different. If you are unfamiliar with this, the following will set you up for next year!
The PMIs (Purchasing Managers’ Indexes) from China’s National Bureau of Statistics (NBS) and Caixin/S&P Global differ primarily in survey scope, methodology, and focus. Here’s a breakdown of the key differences:
1. Provider and Affiliation
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NBS PMI:
- Compiled by the National Bureau of Statistics of China, a government agency.
- Seen as the official PMI, closely aligned with government policies and priorities.
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Caixin/S&P Global PMI:
- Compiled by Caixin Media in collaboration with S&P Global.
- A private-sector index, often considered more market-driven.
2. Survey Scope
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NBS PMI:
- Focuses on large and state-owned enterprises.
- Covers a broader range of industries, including manufacturing and non-manufacturing sectors (e.g., construction and services).
- Reflects conditions in sectors heavily influenced by government policies and infrastructure spending.
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Caixin PMI:
- Focuses on small to medium-sized enterprises (SMEs), particularly in the private sector.
- Captures the performance of companies that are more exposed to market-driven forces and less influenced by state interventions.
3. Sample Size and Composition
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NBS PMI:
- Larger sample size, with about 3,000 enterprises surveyed for the manufacturing PMI.
- Emphasizes state-owned enterprises and larger companies, which tend to dominate traditional industries.
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Caixin PMI:
- Smaller sample size, surveying around 500 enterprises, with a stronger focus on export-oriented and technology-driven firms.
- Provides insights into the private sector and its responsiveness to global economic conditions.
4. Release Dates
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NBS PMI:
- Released monthly, typically on the last day of the month.
- Provides separate PMIs for manufacturing and non-manufacturing sectors.
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Caixin PMI:
- Released a few days later, usually on the first business day of the following month.
- Includes only the manufacturing PMI and services PMI, with no equivalent for non-manufacturing activities like construction.
5. Interpretation and Use
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NBS PMI:
- Reflects the overall economic landscape, especially trends in industries influenced by government policy.
- Analysts use it to gauge the impact of fiscal and monetary policies on the broader economy.
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Caixin PMI:
- Viewed as a better indicator of the health of the private sector and market-driven segments of the economy.
- Considered more sensitive to external shocks (e.g., global trade conditions).
6. Key Insights and Differences in Results
- The NBS PMI often reflects policy-driven stability, showing less volatility because it covers sectors cushioned by government support.
- The Caixin PMI can be more volatile, as SMEs are more sensitive to real-time changes in market demand, supply chain disruptions, and global economic shifts.
Why Both Matter:
- NBS PMI offers a macroeconomic view of China’s state-influenced economy.
- Caixin PMI provides a microeconomic perspective of the more market-driven and globally competitive sectors.
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