China’s May Factory PMI Expected to Stall as Weak Domestic Demand Weighs on Activity

China’s official manufacturing Purchasing Managers’ Index for May is expected to show stagnant factory activity, with economists looking for a reading at the neutral 50 mark.

A Reuters poll cited in the research summary forecast that the PMI would erase modest gains made in April. The expected result points to continued pressure from weak domestic demand and persistent cost pressures.

The data, due for release today, will be closely watched as a gauge of the strength of China’s economic recovery. A flat reading would suggest manufacturers are struggling to build momentum and could reinforce expectations that Beijing may need to provide further support to bolster growth.

The research summary also noted that some cost pressures are partly tied to disruptions related to the Middle East conflict. That connection places China’s factory outlook within a wider global economic picture in which energy and shipping risks are influencing inflation, production costs and policy decisions across major economies.