China manufacturing unexpectedly cools in April – official PMI
2023.04.29 22:20
© Reuters. FILE PHOTO: A worker wearing a face mask works on a production line manufacturing bicycle steel rim at a factory, as the country is hit by the novel coronavirus outbreak, in Hangzhou, Zhejiang province, China March 2, 2020. China Daily via REUTERS
By Ellen Zhang and Ryan Woo
BEIJING (Reuters) -China’s manufacturing activity unexpectedly shrank in April, official data showed on Sunday, raising pressure on policymakers seeking to boost an economy struggling for a post-COVID lift-off amid subdued global demand and persistent property weakness.
The official manufacturing purchasing managers’ index (PMI) was 49.2, down from 51.9 in March, according to data from the National Bureau of Statistics, below the 50-point mark that separates expansion and contraction in activity on a monthly basis.
That missed expectations of 51.4 tipped by economists in a Reuters poll, and marked the first contraction since December last year, when the official manufacturing PMI was at 47.0.
China’s economy grew at a faster-than-expected pace in the first quarter thanks to robust services consumption, but factory output has lagged amid weak global growth. Slowing prices and surging bank savings are raising doubts about demand.
The Politburo meeting on Friday, where a top decision-making body of the ruling Communist Party discussed the economy, and stressed that restoring and expanding demand is the key to a durable economic recovery.
New export orders nudged down to 47.6 from 50.4 in March, the PMI showed.
The manufacturing sector, which provides jobs to about 18% of those employed nationwide, remains under pressure due to slack global demand. Some exporters told Reuters at the country’s biggest trade fair they have frozen investments and some cut labour costs in response.
To boost trade and employment, the cabinet this week unveiled plans, including supporting exports of automobiles, facilitating visas for overseas businesspeople and providing subsidies to firms that hire college graduates.
Elsewhere, confidence in the property sector, for years a pillar of growth in the world’s second-biggest economy, remains fragile. Multiple crisis since mid-2020 have included developers’ debt defaults and stalled construction of pre-sold housing projects.
While policy support measures have helped improve conditions in the industry, pockets of weakness remain and a full-blown recovery appears some way off.
Despite the recent strength seen in consumption, the non-manufacturing PMI edged down to 56.4 versus 58.2 in March.
Official data this month showed retail sales growth quickening in March and hitting near two-year highs, but that was off a low-base and there is caution among economists on the sustainability of such strength.
The composite PMI, which includes both manufacturing and non-manufacturing activity, dropped to 54.4 from 57.0.
