The Caixin Manufacturing PMI slid to 48.3 in May against expectations of 50.8, while falling sharply from the 50.4 seen in the prior month. A reading below 50 indicates contraction, with the Caixin reading showing a drop for the first time in 19 months.

China’s factory activity contracted at a slower rate in May after a reprieve in the tariff war with the US unclogged trade flows, even as weak domestic demand continues to weigh on the economy. The official manufacturing purchasing managers’ index was 49.

China's factory activity likely contracted for a second month in May, a Reuters poll showed on Friday, suggesting trade tensions with major export markets are weighing on manufacturers' minds as the world's top two economies seek a way out of a tariff war.