China’s manufacturing activity grew for the second consecutive month in April, though the rate of expansion decreased amid weak domestic demand and a still-sluggish property sector.
The country’s benchmark purchasing managers’ index recorded 50.4 for the first month of the second quarter, the National Bureau of Statistics reported on Tuesday. The reading dropped from March’s 50.8, but slightly beat a median forecast of 50.3 in a Reuters poll of economists.
With the reading staying above the 50-point mark that separates growth from a contraction, hopes are growing that the world’s second-largest economy may be finding a firmer footing. Before March, the PMI had been below 50 every month since October, reflecting persistently poor business sentiment.
Among the sub-indexes, April’s reading was weighed down by declines in raw material inventory and employment, as in March.
The index for nonmanufacturing business activity slipped for the first time since November, falling 1.8 points to 51.2, dragged down by the catering, real estate and financial sectors. Construction activity, however, edged up by 0.1 from the previous month to 56.3.
Economic data released earlier this month showed a mixed picture of the recovery. China’s gross domestic product growth accelerated to 5.3% on the year in the January-March quarter, in line with Beijing’s whole-year target of “around 5%.”
However, deflationary pressure reemerged as consumer prices rose at a slower pace and the decline in producer prices widened in March. The same month saw industrial profits fall 3.5% year-on-year, compared with a 10.2% rise in the first two months.
Observers are watching whether any new policy support will be rolled out at a meeting by the Communist Party’s Politburo, the country’s top decision-making body, which is expected to convene soon.
A similar factory activity index issued by private media company Caixin, also released on Tuesday, registered at 51.4. The reading, up from 51.1 in March, was the strongest since March 2023.
Wang Zhe, senior economist at Caixin Insight Group, was quoted as saying that manufacturing conditions continued to improve in April, the expansion of supply and demand accelerated, and external demand performed well. However, he noted that employment had not yet improved significantly, and prices remain low, especially at the sales end, which makes it difficult for companies to earn profits. – Nikkei Asia
