THE country’s factory activity slowed slightly in May as high raw materials costs and supply bottlenecks continued to weigh on industrial production, particularly for small and export-oriented firms.

The official manufacturing Purchasing Manager’s Index (PMI) inched lower to 51 in May from 51.1 in April, data from the National Bureau of Statistics (NBS) showed yesterday, but remained above the 50-point mark that separates growth from contraction.

Analysts had expected a PMI reading of 51.1 in May.

The official manufacturing reading pointed to a stabilization in output, with the fewer working days in the month compared to April possible affecting the results.

While the Chinese economy has largely shaken off the gloom from the COVID-19 pandemic, posting a record 18.3 percent growth in the first quarter of this year, analysts expect the brisk expansion to moderate later this year.

Officials warn the foundations for the economic recovery are not yet secure amid problems like higher raw material costs and the epidemic situation overseas.

In April, both output and profits at China’s industrial firms grew at a slower pace.

The official PMI, which largely focuses on big and State-owned firms, showed the sub-index for new export orders stood at 48.3 in May, down from 50.4 in the previous month and slipping sharply into contraction.

Firms continued to lay off workers and at faster pace.

A sub-index for the activity of small firms stood at 48.8 in May, sharply down from April’s 50.8.

Prices for commodities such as coal, steel, iron ore and copper have surged this year, fueled by post-lockdown recoveries in demand and easing liquidity globally.

Policymakers have repeatedly expressed concern about rising commodity prices in recent weeks and called for stricter management of supply and demand and to crack down on “malicious speculation.”

A sub-index for raw material costs in the official PMI stood at 72.8 in May, up from April’s 66.9.

In the services sector, activity expanded for the 15th straight month, and at a faster pace.

The official non-manufacturing Purchasing Managers’ Index (PMI) rose to 55.2 from 54.9 in April, official data showed.

Though slower than manufacturing, a gradual improvement in consumption has stimulated activity in China’s services sector, which includes many smaller and private companies.

The official May composite PMI, which includes both manufacturing and services activity, rose to 54.2 from April’s 53.8.

The construction sector strengthened, reversing its decline from a peak in March. A sub-index of manufacturing employment was at 48.9, the same as non-manufacturing employment.(SD-Agencies)