China’s Factory Activity Slows to 50 in May as Weak Demand Weighs on Growth

China’s factory activity slowed in May, underscoring signs that the world’s second-largest economy is losing momentum as weak demand and broader external pressures weigh on manufacturers. An official survey released over the weekend showed the manufacturing purchasing managers’ index eased to 50 from 50.3 in April, putting factory activity at the threshold between expansion and contraction, according to the Associated Press.

The report also showed weakening underlying conditions in several parts of the manufacturing sector. New orders slipped to 49.9 from 50.6, production edged down to 51.2 from 51.5, and raw material stockpiles fell to 48.6 from 49.3, the AP reported. Those readings suggest that even though output is still marginally expanding, demand is softening and companies are being more cautious about inventory.

That official data aligns with a separate private survey of export-oriented firms cited by Bloomberg, which also found that manufacturing activity slowed in May. Taken together, the two gauges point to a broader cooling in China’s industrial sector after months of uneven recovery. Bloomberg said the private reading indicates the economy is “losing some steam,” especially among firms tied to export markets.

The slowdown matters because manufacturing has been one of China’s main growth engines, and weaker factory activity can ripple through employment, investment and commodity demand. It also comes as Chinese exporters and manufacturers face pressure from soft domestic consumption and disruptions linked to the wider geopolitical environment, including the strain from the Iran war noted in the AP report.

For policymakers in Beijing, the data adds urgency to efforts to stabilize growth without relying too heavily on debt-fueled stimulus. The next round of industrial and trade figures will be closely watched for signs of whether the slowdown is temporary or part of a more persistent weakening in demand.