Jan 13, 2022 06:40 PM

Caixin China General Manufacturing PMI (May 2021)

New work expands at quickest rate for five months

Key findings

• Total new business rises solidly, supported by stronger export sales

• Production growth softens slightly due to supply chain strain

• Staffing levels broadly stable as companies face steep rise in costs

Data were collected 12-20 May 2021

China's manufacturing sector continued to expand in May, with firms reporting the strongest increase in new work for five months. As a result, production expanded further, though the rate of growth softened since April amid reports of material shortages and higher purchasing costs. Suppliers' delivery times lengthened solidly, which in turn drove a rapid increase in input prices. As part of efforts to contain costs, employment was broadly stable in May. At the same time, firms raised their factory gate prices at the quickest rate for over a decade.

The headline seasonally adjusted Purchasing Managers’ Index™ (PMI™) – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – climbed from 51.9 in April to 52.0 in May, to signal a further improvement in operating conditions. Though mild, the upturn was the strongest recorded in the year to date.

Latest data signalled a further increase in demand for Chinese manufactured goods, with total sales rising at the fastest rate for five months. The expansion was supported by greater demand both at home and overseas. Notably, new export order growth improved to a six-month high in May.

Greater amounts of new work led to a further increase in Chinese manufacturing output during May. The rate of expansion softened since April and was moderate. Anecdotal evidence indicated that material shortages and higher purchasing costs had dampened the latest upturn in output.

The sustained improvement in customer demand led firms to raise their buying activity at a solid rate. However, average vendor performance deteriorated again in May, and at a faster pace than in April. According to panel members, greater demand for inputs and low stock levels at suppliers drove the latest deterioration in lead times.

Inventories data meanwhile pointed to a slight drop in stocks of both pre- and post-production items. The falls were often linked to the greater usage of current inventories for production and fulfilment of orders.

After rising slightly in April, employment was broadly unchanged in May. While some firms added to their payrolls in order to expand capacity, other companies expressed a more cautious approach to hiring due to rising input costs. Consequently, backlogs of work rose for the third month in a row.

Average cost burdens rose rapidly in the latest survey period, with the rate of inflation the quickest since December 2016. Panel members frequently mentioned that higher raw material costs pushed up expenses. Firms generally passed on greater input costs to clients by raising their output prices which increased at the fastest rate since February 2011.

Manufacturing firms remained confident that output would increase over the year ahead amid forecasts of rising customer demand and new product releases. That said, the level positive sentiment dipped to a four-month low, largely due to concerns over rising costs and pandemic-related uncertainty.


Commenting on the China General Manufacturing PMI data, Dr. Wang Zhe, Senior Economist at Caixin Insight Group said:

“The Caixin China General Manufacturing PMI came in at 52 in May, its 13th straight month of expansion. The reading was the highest this year so far and 0.1 point higher than the previous month, indicating a steady recovery of manufacturing activity.

1. Both supply and demand expanded, and demand was slightly stronger than supply. The subindex of total new orders hit its highest point in 2021 and the gauge for new export orders was at its highest since November. Supply was relatively weak as raw material shortages and high prices hindered expansion. The output subindex was slightly lower than in the previous month.

2. The job market remained stable. While some enterprises added staff amid strong demand, some others were cautious about hiring due to concerns about rising costs. The two groups offset each other, which resulted in few changes in the overall level of employment. The employment subindex came in just marginally above 50, the line between expansion and contraction.

3. Inflationary pressure grew as prices surged. The gauge for input costs pushed deeper into expansionary territory and rose to the highest reading since December 2016. The pressure of upstream costs was transmitted downstream. The measure for output prices jumped above 60, hitting the joint-highest point since November 2010. The measure for export prices rose to the highest in three years amid rising transportation costs.

4. Inventories decreased and delivery times grew. As demand was stronger than supply last month, stocks of purchased and finished goods both continued shrinking and delivery times became substantially longer. The gauge for suppliers’ delivery times dropped deeper in contractionary range.

“To sum up, manufacturing expanded in May as the post-epidemic economic recovery kept its momentum. Both domestic and overseas demand were strong and supply recovered steadily. The job market remained stable. Manufacturers stayed confident about the business outlook as the gauge for future output expectations was higher than the long-term average. Inflation was still a crucial concern as prices continued rising.

“Policymakers mentioned rising commodity prices at the State Council executive meetings on May 12 and May 19 and issued instructions about stabilizing commodity supplies and prices. Inflationary pressure would limit the room for monetary policy maneuvers. The price transmission effect emerged as manufacturing output prices surged last month. Rapidly rising commodity prices began to disrupt the economy as some enterprises began to hoard goods, while some others suffered raw material shortages. Supply chains were also significantly affected.”


Dr. Wang Zhe

Senior Economist

Caixin Insight Group


Ma Ling

Senior Director

Brand and Communications

Caixin Insight Group

T: +86-10-8590-5204

Annabel Fiddes

Associate Director

IHS Markit

T: +44 1491 461 010

Joanna Vickers

Corporate Communications

IHS Markit

T: +44 207 260 2234

About Caixin

Caixin is an all-in-one media group dedicated to providing financial and business news, data and information. Its multiple platforms cover quality news in both Chinese and English.

Caixin Insight Group is a high-end financial research, data and service platform. It aims to be the builder of China’s financial infrastructure in the new economic era

For more information, please visit and

About IHS Markit

IHS Markit (NYSE: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers nextgeneration information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions.

IHS Markit is a registered trademark of IHS Markit Ltd. and/ or its affiliates. All other company and product names may be trademarks of their respective owners © 2020 IHS Markit Ltd. All rights reserved.

About PMI

Purchasing Managers’ Index™ (PMI™) surveys are now available for over 40 countries and also for key regions including the eurozone. They are the most closely watched business surveys in the world, favoured by central banks, financial markets and

business decision makers for their ability to provide up-to-date, accurate and often unique monthly indicators of economic trends. To learn more go to

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The intellectual property rights to the data provided herein are owned by or licensed to IHS Markit. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without IHS Markit’s prior consent. IHS Markit shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall IHS Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers’ Index™ and PMI™ are either registered trade marks of Markit Economics Limited or licensed to Markit Economics Limited. IHS Markit is a registered trademark of IHS Markit Ltd. and/ or its affiliates.

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