The final China PMI for May is due, including the Caixin Services and Composite PMIs. Recent data indicate China’s May Manufacturing PMI slightly increased to 49.5, while Non-manufacturing PMI slightly decreased to 50.3.

The Caixin Manufacturing PMI showed a decrease at 48.3, down from 50.4. Authorities have promised more stimulus, with announcements expected between 18-19 June.

Differences Between NBS And Caixin PMIs

The PMIs from China’s National Bureau of Statistics (NBS) and Caixin/S&P Global are distinct in scope and methodology. The NBS PMI focuses on large, state-owned enterprises with a broader industry range, while Caixin centres on SMEs in the private sector.

The NBS PMI surveys about 3,000 enterprises, providing a more comprehensive overview of traditional industries. In contrast, the Caixin PMI surveys 500 enterprises, focusing on export-oriented, tech-driven firms.

NBS PMIs are released monthly on the last day, covering both manufacturing and non-manufacturing sectors. The Caixin PMIs follow on the first business day of the month, including only manufacturing and services PMIs.

NBS offers insights into policy-influenced economic stability, whereas Caixin reflects real-time market conditions. Collectively, they provide a detailed picture of China’s economic health from both macroeconomic and microeconomic perspectives.

Evaluating The PMI Readings

While the headline PMI readings stayed close to the contraction-expansion threshold of 50, the contrasting figures suggest distinct patterns emerging within China’s industrial and service sectors. On one hand, we observed a small improvement in the manufacturing data from official channels. On the other, private-sector figures painted a different picture entirely—one perhaps more reflective of pressures facing export-focused and tech-forward firms, those often more exposed to external demand and changing global financial conditions.

Looking ahead, the promise of upcoming policy support, with potential announcements due mid-June, introduces a fresh variable. Though markets often anticipate stimulus, the exact timing and scale can surprise. The gap between official manufacturing data and those centred on smaller firms implies that larger enterprises may be cushioning the effects of weaker orders with state backing or domestic procurement, while smaller businesses struggle without the same buffer.

Historically, when the divergence between these two readings gathers pace, it has preceded swift sentiment shifts in swap rates and implied volatility structures across regional assets. We should treat such divergence not as one-off noise, but as an early signal of realignment between policy narrative and ground-level business performance.

From the policy-driven side, the non-manufacturing print staying marginally in expansion territory suggests continuing domestic demand, although the downward trend cannot be ignored. If this settles into a persistent pattern, it may demand recalibration of expectations, particularly around consumption-linked inputs.

When Caixin data comes in this week, attention should go not just to the headline numbers but also to the sub-indices—new orders, input costs and employment. These are often where the clues lie in forecasting direction for short-dated futures and cross-asset hedging.

It is also worth keeping in mind that, following the previous weak private-sector read, positioning tilted defensively across multiple frameworks. Short-dated vol markets priced in additional drag through to early July, embedded not just in CNH and A-shares but also in indirect exposure across regional FX pairs. This could reverse quickly, especially if June announcements match rhetoric with concrete action.

There is a narrow window. Alignment of policy indication and high-frequency data would indicate a short-term opportunity to reduce downside protection and reprice for recovery—especially in rates curves closely shadowing onshore tone.

Conversely, further weakening in the coming services and composite figures might validate defensive tilts, particularly given the retail and SME response seen last quarter, when weaker prints persisted over consecutive months. We need to remain alert to whether forward-looking components in the PMI data turn up or merely stabilise. Turbulence in those forward components tends to precede broader corrections in market expectations and risk tolerance.

This phase—between data release and policy response—is often where markets misprice premium. Gaps tend to arise between what data shows and how quickly authorities translate that into implemented stimulus, and it’s in that short-term mismatch that positioning matters most.

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