The Caixin/S&P Global manufacturing PMI fell to 48.3 from 50.4 in April, missing analysts’ expectations in a Reuters poll and marking the first contraction since September last year.
The 50-mark separates growth from contraction.
It was also the lowest reading since September 2022.
“The surprisingly sharp fall… means that the survey data now point to a loss of economic momentum last month,” said Huang Zichun, China economist at Capital Economics.
“Domestic headwinds [are] more than offsetting the boost from the US-China trade truce,” she said.
The result is broadly in line with China’s official PMI released on Saturday that showed factory activity fell for a second month.
Wang Zhe, senior economist at Caixin Insight Group, said the slowdown was linked to “sluggish external demand, which fell for a second straight month”.
Beijing should target effective measures to boost domestic demand by improving household incomes, Wang added.
A US federal appeals court temporarily reinstated the most sweeping tariffs, a day after a trade court ruled that President Donald Trump had exceeded his authority in imposing the duties and ordered an immediate block on them.
Two weeks after breakthrough negotiations that resulted in a temporary truce in the trade war between the world’s two biggest economies, US Treasury Secretary Scott Bessent said on Thursday the talks are “a bit stalled”.
Premier Li Qiang last week said the country is mulling new policy tools, including some “unconventional measures”, which will be launched as the situation evolves.
According to the Caixin survey, new export orders shrank for the second straight month in May and at the fastest pace since July 2023.
Producers said the US tariffs restrained global demand. That dragged down overall new orders to the lowest since September 2022.
Factory output, meanwhile, contracted for the first time since October 2023. (Reuters/AFP)
