ExplainerChina’s economic recovery maintains momentum, but risks remain: 4 takeaways from April’s manufacturing, services data

China’s manufacturing production activity expanded in April, but analysts pointed to supply-demand imbalances and lingering deflationary pressures

China’s official non-manufacturing PMI stood at a three-month low in April, dragged down by a moderation of services activities

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Labourers work on a construction site in Shanghai. Photo: EPA-EFE

Published: 12:00am, 7 May 2024Updated: 1:32am, 7 May 2024

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1. Manufacturing recovery consolidates, but underlying issues remain

China’s official manufacturing purchasing managers’ index (PMI) remained in expansion territory for a second straight month in April, although the growth slowed slightly compared to March, with analysts pointing to underlying subindices pointing to persisting supply-demand imbalances and lingering deflationary pressures.

The gauge – a survey of sentiment among factory owners – stood at 50.4 in April, down from 50.8 in March.

Meanwhile, the Caixin/S&P Global manufacturing PMI showed a similar upbeat sentiment, rising to 51.4 from 51.1 in March.

“On the one hand, manufacturing production activity expanded in both the [official] and Caixin readings,” said Erin Xin, an economist for Greater China at HSBC.

“On the other hand, the headline manufacturing [official] PMI moderated a touch while the Caixin manufacturing PMI accelerated, driven by improved external demand in the latter, while profit margins may be showing some signs of pressure.”

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.