Manufacturing Sector - The manufacturing PMI for June 2025 is 49.7%, an increase of 0.2 percentage points from the previous month[4] - In June, 11 out of 21 surveyed industries are in the expansion zone, an increase of 4 industries compared to last month[6] - Large enterprises' PMI is 51.2%, up 0.5 percentage points, while small enterprises' PMI is 47.3%, down 2.0 percentage points[11] Supply and Demand - The production index and new orders index are at 51.0% and 50.2%, respectively, both showing increases of 0.3 and 0.4 percentage points[15] - The supply and demand index has rebounded, aligning with seasonal trends, with certain industries like food and beverage showing expansion[15] - Non-metal mineral products and black metal smelting industries continue to contract due to insufficient end demand from the real estate sector[15] Price Index and Procurement - The main raw material purchase price index and factory price index are at 48.4% and 46.2%, both rising by 1.5 percentage points[20] - The procurement index has increased to 50.2%, up 2.6 percentage points, indicating a rise in enterprise procurement activity[21] Non-Manufacturing Sector - The service sector's business activity index is at 50.1%, a slight decrease of 0.1 percentage points, indicating stability[24] - The construction sector's business activity index is 52.8%, up 1.8 percentage points, showing a seasonal rebound but with notable sub-sector differentiation[26] Risks - External disturbances and changes in real estate demand pose risks to the overall economic outlook[30]

Core Viewpoint - After the weakening of tariff frictions, the manufacturing sector shows signs of stabilization, although industry differentiation has intensified, indicating ongoing pressure in the real estate sector [1]. Manufacturing Sector - In June 2025, the manufacturing PMI was 49.7%, an increase of 0.2 percentage points from the previous month, reflecting a seasonal rebound [2]. - The purchasing index rebounded, suggesting that enterprises are gradually adapting to external disturbances, shifting from cautious expansion to a more positive outlook for future production [2]. - There is a notable divergence between large and small enterprises, with large enterprises continuing to expand while small enterprises are further contracting [2]. Supply and Demand - The overall supply and demand index in June showed a seasonal recovery, with certain industries like food, beverages, and specialized equipment in the expansion zone [3]. - The recovery in supply and demand is attributed to the easing of tariff frictions and the positive impact of fiscal policies, particularly in equipment renewal [3]. - Conversely, industries such as non-metallic mineral products and black metal smelting continue to experience contraction due to insufficient end-demand driven by real estate pressures [3]. Price Index - The manufacturing price index increased in June, primarily driven by rising oil prices due to tensions in the Middle East, while the price index for the black metal smelting industry continued to decline [3]. Non-Manufacturing Sector - The service sector's business activity index slightly decreased to 50.1%, indicating stability, but several industries, including retail and transportation, fell below the critical point after the May Day holiday effect faded [3]. - The construction sector showed a seasonal rebound, with civil engineering activities remaining robust, although demand for commercial housing was weak in the second quarter, potentially dragging down overall construction sentiment [3]. Policy Outlook - With the easing of tariff frictions, addressing low inflation internally is crucial. The government plans to issue the third batch of funds for the old-for-new consumer goods program in July, with expectations for positive policy effects [4]. - Future macroeconomic policies are likely to remain proactive, with a steady and loose monetary policy and accelerated fiscal measures anticipated [4].

Core Viewpoint - The economic data for May indicates a mixed performance, with supply-side growth remaining strong while demand-side indicators show signs of slowing down, particularly in investment and real estate sectors [1][5]. Supply Side: Strong Support - In May, the industrial added value for large-scale enterprises grew by 5.8% year-on-year, slightly above the market expectation of 5.7% [6]. - The manufacturing sector saw a marginal slowdown, with high-tech industries maintaining robust growth rates of 8.6% [6]. - The service sector production index increased by 6.2%, driven by recovering consumer demand and increased holiday travel [9]. Fixed Asset Investment: Real Estate Drag - Fixed asset investment grew by 3.7% year-on-year, below the expected 4.1%, with infrastructure and manufacturing growth rates declining [10]. - Real estate investment saw a significant decline of 10.7%, indicating ongoing challenges in the property market [10][14]. - The construction sector is under pressure due to local government debt and slow issuance of special bonds for projects [10][11]. Consumption: Accelerating Beyond Expectations - Social retail sales increased by 6.4%, significantly higher than the market expectation of 4.8%, with both goods and catering consumption reaching new highs for the year [19]. - The increase in consumption is attributed to policy effects, pre-scheduled shopping festivals, and high demand for electronics and home appliances [19][22]. Outlook: Stabilizing with Localized Pressure - The impact of tariff changes on the economy is expected to weaken, with the second quarter growth likely to exceed earlier market expectations [24]. - However, persistent low prices may continue to erode corporate profits and delay improvements in consumer expectations [24].

Core Viewpoint - The service industry in China is experiencing accelerated growth, with a notable increase in the modern service sector, as indicated by the production index and various sub-sector performances [1] Industry Performance - In May, the national service production index grew by 6.2% year-on-year, an acceleration of 0.2 percentage points compared to the previous month [1] - The information transmission, software, and IT services sector saw a production index increase of 11.2%, while leasing and business services, and wholesale and retail sectors grew by 8.9% and 8.4% respectively, outperforming the overall service production index by 5.0, 2.7, and 2.2 percentage points [1] - From January to May, the national service production index recorded a year-on-year growth of 5.9% [1] Revenue and Business Activity - For the first four months, revenue from large-scale service enterprises increased by 7.2% year-on-year [1] - The service business activity index for May was at 50.2%, rising by 0.1 percentage points from the previous month, while the business activity expectation index stood at 56.5%, also up by 0.1 percentage points [1] - Specific sectors such as railway transport, air transport, postal services, telecommunications, and internet software and IT services reported business activity indices above 55.0%, indicating a high level of economic activity [1]

Group 1: Economic Recovery and Growth - The implementation of proactive macro policies has led to continuous improvement in both manufacturing and non-manufacturing sectors, with enterprises maintaining stable confidence in market development [1][2] - From January to April, profits of industrial enterprises above designated size increased by 1.4% year-on-year, indicating a recovery trend [1] - In May, the manufacturing production index rose by 0.9 percentage points, returning to the expansion zone, with a business activity expectation index of 52.5% [1] Group 2: Investment and New Growth Drivers - New momentum in production activities is growing rapidly, with significant increases in high-tech industry investments, such as information services (40.6%), computer and office equipment manufacturing (28.9%), and aerospace manufacturing (23.9%) from January to April [2] - The new orders index for high-tech manufacturing remained above 52% for several months, indicating sustained expansion [2] Group 3: Service Sector Recovery - The service sector has shown notable recovery, particularly in tourism and dining during the "May Day" holiday, with business activity indices in transportation and accommodation sectors also in the expansion zone [2] - The business activity expectation index for most service enterprises is at 56.5%, reflecting continued optimism about market development [2] Group 4: Policy Measures and Structural Reforms - Continuous implementation of economic stabilization policies aims to expand domestic demand and strengthen the domestic economy, utilizing proactive fiscal and moderately loose monetary policies [3] - Efforts to enhance enterprise efficiency include fostering new quality productivity and promoting the integration of technological and industrial innovation [3] Group 5: Market Reforms and Opening Up - Comprehensive reforms are being pursued to promote high-level opening up and transition from a large to a strong domestic market, including the establishment of a unified national market and removal of market access barriers [4] - Initiatives to create a national trading platform system and enhance cross-regional trade cooperation are underway [4]

Report Industry Investment Rating No relevant content provided. Core Viewpoints - In May, China and the US reached an agreement to suspend the implementation of tariffs, leading to an improvement in Sino-US trade. The import index and new export order index rebounded, driving the recovery of domestic supply and demand, and the manufacturing PMI increased month-on-month. However, considering that the new order index is still below the boom line, enterprises' willingness to expand production is not strong, and the price level continues to decline. The marginal improvement in external demand may have limited impact on boosting the boom level. The US anti-globalization policy has long-term and negative effects on the Chinese economy, and the room for easing domestic fiscal and domestic demand promotion policies may be limited. The expectation of stable growth policies will continue to strengthen [3][26]. Summary by Relevant Catalogs 1. Export Marginally Improves, Manufacturing Boom Rebounds - Manufacturing PMI rebounds, with a month-on-month increase greater than the seasonal average. In May, the manufacturing PMI was 49.5%, up 0.5 percentage points from the previous month, but still below the critical point. From a seasonal perspective, the month-on-month increase of 0.5 percentage points is greater than the average increase of 0.1 percentage points in the past five years. However, the manufacturing PMI is lower than the average of 49.9% in the same period of the past five years, only higher than that in 2023 [12]. - Most sub - indices of the manufacturing PMI increase, and the number of sub - indices in the expansion range remains the same as last month. Among the 13 sub - indices, 9 increase in boom level and 4 decline. Only 2 sub - indices, namely the production and operation activity expectation and production, are in the expansion range [14]. - The price indices have declined for three consecutive months, but the decline has narrowed. In May, the main raw material purchase price index and ex - factory price index of the manufacturing PMI were 46.9% and 44.7% respectively, down 0.1 percentage points from the previous month, and the decline has narrowed by 2.7 and 3.0 percentage points respectively compared with the previous month [16]. - The finished product inventory decreases passively, and enterprises' willingness to expand production increases. The raw material inventory index is 47.4%, up 0.4 percentage points from the previous month; the finished product inventory index is 46.5%, down 0.8 percentage points; the purchase volume index is 47.6%, up 1.3 percentage points from the previous month [16]. - Production returns to expansion, and the new order index approaches the critical point. The production index is 50.7%, up 0.9 percentage points from the previous month, rising above the critical point. The new order index is 49.8%, up 0.6 percentage points from the previous month [19]. - The PMI of large enterprises rises above the critical point, the boom of medium - sized enterprises declines, and the boom of small enterprises improves. The PMI of large enterprises is 50.7%, up 1.5 percentage points from the previous month; the PMI of medium - sized enterprises is 47.5%, down 1.3 percentage points from the previous month; the PMI of small enterprises is 49.3%, up 0.6 percentage points from the previous month [19]. - The high - tech manufacturing industry continues to expand. The PMI of the high - tech manufacturing industry is 50.9%, remaining in the expansion range for four consecutive months [20]. 2. Service Industry Boom Slightly Increases, Construction Industry Boom Declines - The non - manufacturing boom level declines but remains in the expansion range, and the month - on - month performance is weaker than the seasonal average. In May, the non - manufacturing business activity index was 50.3%, down 0.1 percentage points from the previous month, but still above the critical point. From a seasonal perspective, the month - on - month decline of 0.1 percentage points is lower than the average increase of 0.9 percentage points in the past five years [22]. - The service industry boom rebounds, and the boom of holiday - related consumption industries increases. The service industry business activity index is 50.2%, up 0.1 percentage points from the previous month. Driven by the "May Day" holiday effect, industries such as railway transportation, air transportation, accommodation, and catering have significantly rebounded [22]. - The construction industry boom declines but remains in the expansion range. The construction industry business activity index is 51.0%, down 0.9 percentage points from the previous month. The business activity index of civil engineering construction is 62.3%, up 1.4 percentage points from the previous month [23]. - The composite PMI output index slightly rebounds. In May, the composite PMI output index was 50.4%, up 0.2 percentage points from the previous month, indicating that the overall production and operation activities of Chinese enterprises continue to expand [24]. 3. Marginal Recovery of Boom, Policy Still Needs to Be Strengthened - The marginal improvement in external demand has limited impact on boosting the boom level. Although the manufacturing PMI has increased, the new order index is still below the boom line, enterprises' willingness to expand production is not strong, and the price level continues to decline. The US anti - globalization policy has long - term negative effects on the Chinese economy, and the room for easing domestic fiscal and domestic demand promotion policies is limited. Therefore, the expectation of stable growth policies will continue to strengthen [3][26].

Economic Indicators - In May 2025, China's manufacturing PMI rose to 49.5%, an increase of 0.5 percentage points from April[1] - The non-manufacturing business activity index in May was 50.3%, a decrease of 0.1 percentage points from April[1] - The comprehensive PMI output index increased to 50.4%, up 0.2 percentage points from April[1] Factors Influencing PMI - The rise in manufacturing PMI was primarily driven by the implementation of proactive macro policies and a rebound in exports due to the easing of the US-China tariff conflict[2] - New credit and social financing in May were supported by a series of financial policy measures, including a 0.25 percentage point reduction in public housing loan rates[2] - The new export orders index and import index rose to 47.5% and 47.1%, respectively, reflecting increases of 2.8 and 3.7 percentage points from the previous month[2] Challenges and Limitations - Despite the improvements, the manufacturing PMI remains in a contraction zone, influenced by high tariffs over 40% from the US and ongoing adjustments in the domestic real estate market[3] - High-frequency data indicated a decline in operating rates in most industries, except for those related to infrastructure investment, which saw an increase[3] Price Trends - The manufacturing PMI's price indices both fell slightly by 0.1 percentage points, remaining in a deep contraction zone, with PPI expected to decline further from -2.7% to around -3.1% year-on-year[4] - High-tech manufacturing PMI remained above 51.5% for four consecutive months, indicating strong growth and resilience in this sector[4] Service Sector Insights - The service sector PMI was 50.2%, up 0.1 percentage points from April, supported by increased tourism during the May Day holiday[5] - The construction PMI fell to 51.0%, down 0.9 percentage points, primarily due to a decline in real estate investment activities[5] Future Outlook - The implementation of steady growth policies is expected to provide crucial support for macroeconomic operations, with a focus on expanding domestic demand and accelerating infrastructure investment[6] - The manufacturing PMI is projected to rise further to around 49.7% in June, driven by the "export rush" effect following the easing of tariffs[6]

Core Viewpoints - The manufacturing PMI for May increased marginally to 49.5%, up 0.5 percentage points from the previous month, indicating a slight recovery in manufacturing activity [2][10][52] - The new export index remains low, while domestic demand, particularly in consumer goods and equipment manufacturing, shows significant improvement [2][21] Manufacturing Sector - The manufacturing PMI shows overall improvement, with production and new order indices rising by 0.9 and 0.6 percentage points to 50.7% and 49.8%, respectively [2][52] - The production index has recovered above the expansion threshold, while the new order index remains in contraction territory, indicating faster production but weaker demand [2][10] - Industries with high domestic demand, such as equipment manufacturing and consumer goods, have seen PMIs rise by 1.6 and 0.8 percentage points to 51.2% and 50.2% [2][21] - Conversely, export-dependent sectors like textiles and chemicals have underperformed, with production and new order indices below the critical point [2][21] Non-Manufacturing Sector - The non-manufacturing PMI decreased slightly to 50.3%, with the construction sector experiencing a notable decline due to weak real estate performance [2][67] - The construction PMI fell by 0.9 percentage points to 51%, while civil engineering activities are accelerating, as indicated by a PMI of 62.3% [29][67] - Service sector PMI saw a marginal increase to 50.2%, driven by improved activity in tourism and dining during the holiday period [40][67] Future Outlook - Uncertainties surrounding U.S. tariff policies remain significant, necessitating close monitoring of fiscal policies' impact on domestic demand [45] - The recent court ruling against Trump's tariffs has created a temporary freeze on tariff enforcement, adding to the external uncertainties [45] - Service consumption and infrastructure investment are expected to be key areas for fiscal support, potentially enhancing domestic demand [45]

Group 1: Manufacturing Sector - The manufacturing PMI for May 2025 is reported at 49.5%, a 0.5 percentage point increase from the previous month, aligning with market expectations[2][4] - The production index rose to 50.7%, up 0.9 percentage points from last month, indicating a recovery in production activities[5][14] - New orders index increased to 49.8%, up 0.6 percentage points, reflecting improved demand conditions[5][14] - High-tech manufacturing PMI stands at 50.9%, while energy-intensive industries continue to decline, with a PMI of 47.0%[6][19] Group 2: Service and Construction Sectors - The service sector PMI slightly increased to 50.2%, driven by the "May Day" holiday effect, with significant activity in tourism and hospitality[31][32] - The construction sector PMI is at 51.0%, down 0.9 percentage points, indicating a slowdown in expansion due to housing demand constraints, although infrastructure projects are accelerating[35][36] - Special bonds issuance in May reached 443.2 billion yuan, significantly higher than April's 230.1 billion yuan, supporting investment in infrastructure[35]

Core Viewpoint - The manufacturing PMI in May shows signs of recovery, indicating an overall expansion in China's economy, while the non-manufacturing sector remains stable but slightly declines [1][6][8]. Manufacturing Sector - The manufacturing PMI for May is reported at 49.5%, an increase of 0.5 percentage points from the previous month, indicating an improvement in economic conditions [1][3]. - The production index rose to 50.7%, up 0.9 percentage points, suggesting an acceleration in manufacturing activities [5]. - Large enterprises' PMI increased to 50.7%, returning to the expansion zone, with production and new order indices at 51.5% and 52.5%, respectively [5]. - High-tech manufacturing PMI stands at 50.9%, maintaining expansion for four consecutive months, while energy-intensive industries show lower activity with a PMI of 47.0% [5][6]. Non-Manufacturing Sector - The non-manufacturing business activity index is at 50.3%, a slight decrease of 0.1 percentage points, but still above the critical point, indicating continued expansion [8][11]. - The service sector's business activity index rose to 50.2%, driven by increased consumer activity during the "May Day" holiday [10]. - The construction industry remains in expansion with a business activity index of 51.0%, although it has slightly decreased from the previous month [10][11]. Market Expectations - The production and business activity expectation index for May is at 52.5%, reflecting stable confidence among manufacturing enterprises [6]. - The service sector's business activity expectation index is at 56.5%, indicating ongoing optimism among service providers [10].