China’s factory activity grows at slower pace in April as order, price pressure undercuts economic recovery
- Official manufacturing purchasing managers’ index (PMI) remained in expansion territory for a second consecutive month in April, although the pace slowed
- Officials admitted that manufacturers are facing higher costs, but some analysts said recovery in industrial activity would continue into the second quarter
Contractions in gauges measuring orders and output prices, as well as a new high for the production subindex, indicated pressure on future demand and capacity, despite the continued expansion of China’s manufacturing activity in April, analysts said.
Factory activity remained in expansion territory for the second consecutive month, with the official manufacturing purchasing managers’ index (PMI) – a survey of sentiment among factory owners – standing at 50.4.
The figure, though, remained above the watershed level of 50, indicating expanding activity, after the reading in March had ended five consecutive months of contraction.
This in turn could dampen the recovery in corporate profits and private investment
“Though economic activities continue to expand, more manufacturers are facing higher costs,” senior NBS statistician Zhao Qinghe said.
Within the official manufacturing PMI, the subindex gauging new orders dropped to 51.1 from 53 in March, while the new export order subindex fell to 50.6 from 51.3, indicating that demand has not yet been fully consolidated.
“The pricing power of producers is still weak, as seen in the faster expansion of production activities than demand, coupled with the contraction of output prices and the expansion of input prices,” said Junyu Tan, economist for North Asia with credit insurance company Coface.