China’s factory activity decelerates on surging costs of raw materials

China saw a minimal decline in its factory activity in May. The contraction was due to an increase in raw material prices and supply constraints, which dragged the industrial sector including small and export-heavy businesses.

The official manufacturing Purchasing Manager’s Index (PMI) was read at 51.0 in May. The figure came lower than the 51.1 reading seen in April, data from the National Bureau of Statistics showed on Monday. While there was a slight plunge, the index remained above the 50 threshold that separates growth from decline.

Commodity prices surged this year on post-lockdown recoveries and easing liquidity around the globe. This concern had inflicted pressures on the Chinese economy, with policymakers calling for immediate and stricter management of supply and demand