China’s National Bureau of Statistics (NBS) has released the official Purchasing Managers’ Indexes (PMIs) for June 2025, with the manufacturing PMI expected to slightly improve but still remain in contraction. The non-manufacturing PMI is anticipated to continue expanding. In May, China’s industrial firms witnessed a decline in profits amid ongoing economic difficulties, including high US tariffs and deflationary pressures.
The NBS and Caixin/S&P Global PMIs differ in several ways. The NBS PMI, compiled by a government agency, reflects state-owned and large enterprises and provides insights into sectors heavily influenced by government policies. In contrast, the Caixin PMI is a private-sector index focusing on small to medium-sized enterprises (SMEs) in the private sector, offering a market-driven perspective.
Understanding Pmi Surveys
The NBS PMI surveys around 3,000 enterprises, emphasising state-owned firms, while the Caixin PMI surveys 500 businesses, highlighting export-oriented companies. The release dates vary, with the NBS PMI coming out monthly on the last day and the Caixin PMI shortly after. The NBS PMI captures broader economic trends, while the Caixin PMI indicates private sector health and sensitivity to external conditions. Understanding both PMIs provides a comprehensive view of China’s economy.
The distinction between the two PMI readings is not just technical but also suggestive of where the underlying momentum lies. NBS data implies that state-led manufacturing continues to stall, though the pace of contraction may soften. However, with non-manufacturing activity still pointing to expansion, particularly in services, there’s a suggestion of uneven growth—buoyed less by new industrial output and more by domestic consumption and government-led projects.
What does that leave us with? The fact that profits fell in May for industrial firms, coupled with fragmented PMI signals, should trigger deeper reflection. With tariffs from the US remaining high and price pressures generally pointing downward, we might be seeing a business environment where cost control trumps capacity expansion. That backdrop tends to rearrange how market participants should be approaching sectoral bets. Profit trends do not necessarily follow output metrics when pricing power is under strain. This disconnect can matter more than usual.
Zhao, who follows the Caixin gauge closely, has already pointed to the resilience among smaller private businesses. That index, sensitive to global demand and logistics disruptions, suggests that these firms are still finding export opportunities. However, we’d caution against assuming that stability in the private survey means a uniform recovery. Policy support remains more likely to favour sectors covered more heavily by the NBS reading. That gap could translate into diverging trajectories in the weeks ahead.
Wang, looking at raw input costs, also raised attention to the slower pass-through of material price changes. If commodity inputs or upstream goods continue to experience downward pricing pressure, then producer margins could find some breathing room—at least temporarily. But again, it’s the magnitude and sustainability of downstream demand that keeps the picture from looking more assured. No automatic rebound is implied.
Potential Market Implications
For those of us tracking implied volatility and short-term macro hedges, the price action around PMI data, especially in Chinese equity futures and commodity-linked options, tends to offer entry points. The discrepancy between sentiment based on NBS signals versus actual output and earnings data can create two-way opportunity, particularly for directional spreads or straddle strategies. Skew adjustments might deserve a second look if the services expansion persists without spillover into the goods-producing side.
Others in the field, such as Li, noted in their latest commentary that forward-looking sub-indices—such as new orders or export figures—remain unreliable guides when domestic stimulus hasn’t fully materialised. That means options pricing may underrepresent the chance of larger swings in mainland equities or industrial-linked currencies.
In terms of action, we’re watching closely for a divergence in follow-through moves after the upcoming Caixin survey. If smaller exporters show resilience, then bullish momentum in consumption or logistics-related counters could widen. But staying nimble is essential; the lack of consistency across sectors hints at false starts rather than breaks in trend.
Finally, from a technical standpoint, the risk asymmetry surrounding China’s data beats or misses is rising. Even small variations in PMI readings have, over recent months, triggered sudden intraday moves in copper, base metals, and equity indices exposed to China. This should be reflected in how spreads are constructed and how correlation assumptions are made, especially when layering in macro overlays or tail-risk buffers.
It’s in that nuance—between profit direction, input cost dynamics, and sector-specific resilience—that prices will respond more sharply than general growth narratives would suggest.
