China's Manufacturing PMI Drops to 50 in May as New Orders Contract

China's official manufacturing purchasing managers' index moderated to 50 in May from 50.3 in April, the National Bureau of Statistics reported on May 31, 2026. The flat reading signals stalling factory activity, with the new orders sub-index slipping to 49.9 from 50.6, indicating contraction. The production sub-index edged down to 51.2 from 51.5, and raw material stockpiles fell to 48.6 from 49.3. China's economy has been relatively insulated from the Iran war's energy disruption due to ample oil reserves and diversified sources, aiding exports to Europe and Southeast Asia. However, domestic demand remains sluggish, weighed by a years-long property slump. Morgan Stanley expects China to meet its 2026 growth target of 4.5%–5%, though oil prices and global supply uncertainties remain key risks.