BEIJING—Activity in China’s factories held steady in May, a private gauge indicated, pointing to a sustained growth momentum in the world’s second largest economy.

The Caixin China manufacturing purchasing managers index held steady at 51.1 in May, buoyed by a pickup in production and new orders, Caixin Media Co. and research firm Markit said Friday. The 50 level separates an expansion in manufacturing activity from a contraction.

While...