Manufacturing activity in China contracted in April

Main data on economic activity in China’s manufacturing sectors fell back to the contraction threshold in April, following growth in the past three months following the lifting of Covid-19 restrictions late last year.

The Purchasing Managers’ Index (PMI), announced by China’s National Bureau of Statistics (UIB), declined in both the manufacturing and non-manufacturing sectors in April. The manufacturing PMI decreased 2.7 points to 49.2, while the non-manufacturing PMI decreased 1.8 points to 56.4.

The manufacturing PMI fell below the growth threshold for the first time in three months with signs of a post-Covid-19 recovery.

Values ​​above 50 in the PMI indices indicate an increase in economic activities, and values ​​below indicate a decrease.

EFFECTIVENESS IN THE MANUFACTURING SECTOR BELOW EXPECTATIONS

The manufacturing PMI came in below market expectations of 51.5, raising questions about the fragility of the economic recovery.

The manufacturing production sub-index fell from 54.6 to 50.2, and the new orders sub-index fell from 53.6 to 48.8. The new export orders sub-index fell from 50.4 to 47.6, and the trade expectations sub-index, which is seen as an indicator of market confidence, fell from 55.5 to 54.7 percent.

The machinery and hardware manufacturing subindex was 50.1 percent, the consumer products manufacturing subindex was 49.8 percent, and the advanced technology manufacturing subindex was 49.3 percent.

Cao Chinghi, a senior statistician at UIB, assessed that the fall in April was due to insufficient demand in the market and a high base effect caused by the rapid recovery in the first quarter.

Cao noted that the still high job prospects sub-index “shows manufacturers’ confidence in market growth.”

CONTINUED GROWTH IN NON-MANUFACTURING SECTORS

On the other hand, the non-manufacturing PMI continued to exceed the growth threshold in the last 3 months. Although the index fell 1.8 points to 56.4, it remained above the growth threshold.

While the business activity sub-index rose to 55.1, it rose 15.1 points compared to April last year, when lockdown and quarantine measures were implemented in many cities due to Covid-19 outbreaks.

The new orders subindex, which is an indicator of demand in the services sector, was 56.4 percent, and the business expectations subindex, which is an indicator of market confidence, was 62.3 percent. .

Although the construction sector sub-index decreased 1.7 points compared to the previous month, it showed a strong recovery with 63.9.

After the restrictions due to Covid-19, which hindered economic activities in China, were lifted in December 2022, signs of recovery in the economy were seen with the new year. The PMI manufacturing and non-manufacturing indices have remained above the growth threshold since January, posting 4.5 percent growth in the first quarter. (AA)