(Yicai) May 31 -- Activity in China’s manufacturing sector contracted unexpectedly in May, after growing for two straight months, as new orders and foreign sales dropped.

The manufacturing purchasing managers’ index was 49.5 last month, according to data the National Bureau of Statistics released today. It was 50.4 in April and 50.8 in March after shrinking between last October and February. A reading below 50 indicates contraction.

The new orders sub-index fell to 49.6 from 51.1, indicating weaker demand, while foreign sales declined to 48.3 from 50.6, the data showed. The production sub-index sank to 50.8 from 52.9.

From the perspective of enterprise size, the PMI for large companies rose 0.4 point to 50.7, while that for small and mid-sized firms tumbled 3.6 points and 1.3 points to 46.7 and 49.4, respectively.

Despite falling to a three-month low of 54.3 from 55.2, sentiment in the manufacturing sector stayed positive.

Services PMI

The non-manufacturing PMI unexpectedly dipped to 51.1 from 51.2 the previous month, the data also showed, extending the expansion in service sector activity to a 17th straight month, but at the slowest pace since January’s 50.7. 

From a sectoral perspective, postal services, telecoms, radio, television and satellite transmission services, internet software and information technology services, and culture, sports, and entertainment sectors all came in above 55. Capital market services and the real estate industry remained below 50.

Sentiment in the services sector remained upbeat, easing to 56.9 from 57.2.

The composite PMI, which tracks the manufacturing and service sectors, fell to 51 from 51.7 last month, showing that overall production and business activities continued to recover and develop.

Editor: Futura Costaglione