China’s factory activity likely grew at slower pace in April- Reuters poll

BEIJING (Reuters) – China’s factory activity likely expanded at a slower pace in April, a Reuters poll showed on Friday, pointing to the strains on the manufacturing sector from weak global demand and a slow recovery in the long-depressed domestic property industry.

The official manufacturing purchasing managers’ index (PMI) is expected to have edged down to 51.4 in April from 51.9 in March, according to the median forecast of 23 economists in a Reuters poll.

An index reading above 50 indicates expansion in activity on a monthly basis and a reading below indicates contraction.

China’s economy grew at a faster-than-expected pace in the first quarter, as the end of strict COVID curbs lifted businesses and consumers out of crippling pandemic disruptions.

However, uncertainties from the global banking crisis and slowing growth in major economies hurt demand for China’s goods, adding to pressure on manufacturers and around 180 million jobs in the trade sector.

“The China Containerized Freight Index edged lower in April from the previous month, which signals some softness in new export orders,” said Bansi Madhavani, senior economist at ANZ, in a research note on Friday.

Domestically, economists from Barclays (LON:) noted that some steelmakers are cutting capacity ahead of this week’s Politburo meeting and also amid weak demand from the property sector.

“Demand from infrastructure may also ease from March levels on smaller local-government special bonds issuance.”

Sentiment for China’s property sector, for years a pillar of growth in the world’s second-biggest economy, has been crushed by multiple crisis since mid-2020, including developers’ debt defaults and stalled construction of pre-sold housing projects.

Support measures by policymakers have helped improve sentiment in the industry, though pockets of weakness remain and a full-blown recovery appears some way off.

The official manufacturing PMI, which largely focuses on big and state-owned firms, and its survey for the services sector, will be released on Sunday.

Markets are also watching the Politburo meeting, when a top decision-making body of the Communist Party discusses the economy.

Policymakers this week unveiled plans to boost trade and employment – one of the two major challenges facing the economy as it looks for a strong post-COVID lift-off.

(Polling by Madhumita Gokhale and Anant Chandak; Reporting by Ellen Zhang and Ryan Woo; Editing by Shri Navaratnam)

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