China's Headline SMI registered 51.2 in May, growing to a 4-month high, sustaining an unbroken run of expansion across the past 12 months. The Sales and Market growth indexes also increased to 4-month highs, and Staffing Levels grew to a 27-month high in May, yet Business Confidence fell simultaneously to a near 3 year low, a paradox that captures the contradictory signals running through China's economy right now. Sales Managers are recording solid results while remaining cautious about the conditions sustaining them, most likely reflecting ongoing uncertainty around trade policy and external demand. That caution has not, however, translated into retrenchment: the breadth of sub-indexes now sitting at multi-month or multi-year highs suggests an economy with more underlying momentum than the confidence reading alone would imply.
Across all sectors, Prices Charged edged down just slightly from April, a negligible movement that nonetheless continues a broader moderating trend from the elevated readings of late 2025 after a period of deflation. The Staffing Levels Index hit 50.5, although very a low growth, it’s still the highest reading in over two years, indicate that businesses across all sectors are committing to headcount in a way that was largely absent through 2025. When hiring decisions follow revenue rather than lead it, it is typically a sign that managers believe current conditions have some durability.
China's manufacturing sector posted a Headline SMI recording a 4-month high in May, with sub-index detail that is among the most compelling in the dataset. Market Growth reached its strongest reading in over four years, consistent with recovering export order books and easing global logistics pressures. Staffing Levels and Prices Charged both hit multi-month highs. The single note of caution is Business Confidence, which fell to 50.0, manufacturers appear to be executing well while suspending judgment on whether current conditions are sustainable – their expectations for trading conditions over the next few months remain unchanged.
The services sector tells a subtler and more mixed story. Sales Growth and Prices Charged both eased to 3-month lows, the latter possibly reflecting softening domestic consumer demand or increased competition within the sector. Business Confidence in services is, by contrast, at a 4-month high, and Staffing Levels reached a 7-month high, suggesting services businesses retain an appetite for expansion even as top-line momentum gently fades. The increases in the Market Growth Index reading provides reassurance that the softness in sales and pricing has not yet fed through into broader demand deterioration.
The overall picture is of an economy expanding more broadly than headline readings alone convey, with the industrial sector providing fresh impetus at precisely the moment services momentum is easing. If export conditions remain supportive and manufacturing confidence recovers toward the levels the output data would justify, China's overall growth profile could strengthen further in the months ahead, and the broader economy should continue to outperform the more cautious assessments that have surrounded it throughout this period.
The Sales Managers' Indexes provide the earliest monthly data on the speed and direction of economic activity in key growth areas of the world.
The SMI’s (Sales Managers’ Indexes) are compiled and analysed by World Economics and are based on survey data collected from a panel of companies stratifying all Industry Classification Board (ICB) sectors which are weighted to reflect their contribution to national Gross Domestic Product.
Key advantages of the SMI's:
SMI data for China is published as diffusion indexes to gauge the speed and direction of economic activity.
Monthly data since 2013 is downloadable for all-sectors, manufacturing and service sectors separatly in a consistent unadjusted format for 6 key indexes: