China’s manufacturing activity in April showed expansion for the second consecutive month, with a Purchasing Managers Index (PMI) of 50.4. This was a slight decrease from the March report, raising concerns about the country’s economic stability amid various challenges such as weak consumer confidence, a struggling property sector, and debt issues at the local government level. The PMI composite index, which is based on five variables including production, new orders, supplier delivery times, inventories, and employment, serves as a key indicator of economic trends in the manufacturing sector.
The April PMI data revealed mixed results for different components. Production expanded to 52.9, but at a slower pace compared to March. New company orders stood at 51.1, indicating a decrease in demand since the previous month. The index for new export orders was 50.6, showing expansion but with a smaller margin. Inventory levels for finished products decreased, suggesting higher demand, while raw material inventories remained stable. However, the employment index continued to contract for the 14th consecutive month, as employers remained cautious about hiring new staff.
A separate PMI survey published by Caixin reported a higher headline PMI of 51.1 in March, indicating a faster rate of expansion compared to China’s official numbers. The private sector survey suggested stronger growth in manufacturing activity, showcasing a more optimistic outlook than the official data. China’s GDP grew by 5.3 percent year-on-year in the first quarter, surpassing expectations. However, this growth was mainly driven by the first two months of the year, with some key sectors experiencing slowdowns or reversals in growth.
As China prepares for the Third Plenum in July, economists are hoping for more robust measures to stimulate the economy and address ongoing challenges. The meeting of Communist Party leaders is expected to focus on economic policies and reforms that could support sustainable growth and address issues such as employment, investment, and production. With uncertainty persisting in the global economy, particularly in light of the ongoing pandemic and geopolitical tensions, China’s economic performance will continue to be closely monitored by analysts and policymakers.
