China's Caixin manufacturing PMI contracts in May

The Caixin China General Manufacturing Purchasing Managers' Index (PMI) came in at 48.3 in May, down 2.1 percentage points from the previous month, according to a Caixin report released on Tuesday.

The latest PMI reading marks the first time in eight months that the index has slipped below the 50-point threshold separating expansion from contraction.

Both the production index and the new orders index also dropped from expansionary to contractionary territory.

The contraction in supply and demand was attributed to sluggish external demand, which fell for a second straight month, said Wang Zhe, a senior economist at Caixin Insight Group.

The report pointed out that sentiment in the country's manufacturing sector improved in May. Businesses have become more optimistic and confident since April, with hopes that better trade conditions and growing export markets would boost their sales over the next year.

On the policy front, the impact of earlier supportive consumption measures needs to be reassessed, and new steps should be taken as needed, said Wang. Efforts to boost domestic demand should focus on improving the employment environment, raising residents' disposable income, and restoring confidence to support steady economic recovery, he added.