China’s strong economic momentum eased slightly in May, as surging raw material prices squeezed profits, businesses turned more cautious and property and car sales underperformed. That’s the outlook of an aggregate index combining eight early indicators tracked by Bloomberg, which slipped from April but remained in expansionary territory, underpinned by solid export demand.

Momentum Eases

Economic activity remained resilient but lost some steam

Source: Bloomberg Economices

Note: Redder means economy is getting hotter

Confidence among small and medium-sized enterprises, or SMEs, eased in May from the highest level since the Covid-19 outbreak in the previous month, according to a survey of more than 500 companies by Standard Chartered Plc. The index measuring current performance weakened in the month, while a drop in the ‘expectations’ sub-index points to concerns on future demand and profit margins.

The strength of overseas demand can be seen in South Korea’s exports in the first 20 days of the month, which surged at the fastest pace in a decade.

Resilient Exports

But real-estate and car sales lag

Souce: Bloomberg Economics

A global commodities rally helped boost factory-gate inflation in China to the highest level on record in May, according to Bloomberg Economics’ price tracker. Copper and iron ore prices surged to records this month, though the rally stalled in the past two weeks as China stepped-up efforts to contain costs amid inflation fears.

Cautious Small Businesses

While steel rebar inventory was down

Source: Bloomberg Economics, data compiled by Bloomberg

China’s stock market climbed in May, with the benchmark index of 300 mainland companies this week reaching its highest level since March.