China’s Manufacturing Activity Slows In April

By Glenn Dyer | More Articles by Glenn Dyer

After two months of small improvements, the latest surveys of Chinese manufacturing activity unexpectedly slowed noticeably in April, raising the question if the sector was starting another downturn at the start of the June quarter.

The private gauge of China’s factory activity (mostly targeted at smaller companies) weakened in April but still showed expansion, in line with an official gauge (which measures activity in larger companies) which also showed slower growth in the sector.

The Caixin China manufacturing purchasing managers index dropped to 50.2 in April from 50.8 in March, while the official (Government) manufacturing purchasing managers index, released earlier in the day, declined to 50.1 in April from 50.5 in March.

Economists said the similar size of the declines in the pace of expansion (50 is the dividing line between growth (above and contraction under) suggests that manufacturing did slow across the board last month.

But they also caution that while large compared to western economies, manufacturing has a smaller share of the Chinese economy and the service sector activity survey due later this week will be watched more closely.

The Caixin Media/Markit survey said the index stayed above the 50 mark, indicating an expansion in activity, for two months in a row. the official survey returned to growth in March as well which was the first evidence of expansion for four months.

The production subindex rose at a slower pace in April than in March, as did the total new orders subindex, according to the release. The new export subindex, however, returned to contractionary territory, suggesting weaker demand for exports.

But both surveys suggest continued expansion, but at a noticeably slower pace compared with March.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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