Brief: China's Manufacturing Sector Retreats After U.S. Import Rush

China's official NBS manufacturing purchasing managers' index (PMI) and the Caixin China General Manufacturing PMI showed Chinese manufacturing activity contracted in May as demand for consumer goods exports collapsed after importers' 2H24/1Q25 race against tariffs.

June 03, 2025 • Est. Reading Time: 4 minutes

Mobius Intel Brief:

The Census Bureau reported a record $66 billion (-19.5%) M/M drop in imported goods versus a $7.7 billion rise in exports in April, highlighting the intensity of U.S. businesses’ 2H24/1Q25 race to import consumer products ahead of the Trump administration’s tariffs.

Preemptive inventory builds and the ensuing retreat in U.S. demand for imported consumer goods since April is increasingly evident in industrial activity indicators for export-centric economies like China, where both private and government-reported data showed sector contraction last month.

  • China’s official NBS Manufacturing Purchasing Managers Index (PMI) showed sector contraction (49.5) for the second consecutive month in May, narrowly above the trailing 10YR seasonally-adjusted 10th percentile.

  • S&P Global’s Caixin China General Manufacturing PMI fell 2.1 pp M/M to 48.3 in May—the fastest rate of sector contraction since May 2022 and the reading’s sharpest M/M decrease since April 2022.

Domestic Industrial Demand Signals

This week’s economic data offered anecdotal evidence of near-term domestic industrial demand potential with the ISM’s May manufacturing PMI survey, which showed sector activity contracted for the 29th time in the last 31 months.

While the ISM’s report contrasts against an expansionary print in S&P Global’s final manufacturing PMI for May, demand-side concerns will likely remain a headwind for industrial commodities after consecutive months of bearish data in the ISM’s subindices for employment, new orders, and input prices.

This commentary contains our views and opinions and is based on information from sources we believe are reliable. This commentary is for informational purposes, should not be considered investment advice, and is not intended as an offer or solicitation with respect to the purchase and sale of commodity interests or to serve as the basis for one to decide to execute derivatives or other transactions. This commentary is exclusively intended for Mobius clients and is not considered promotional material.