Workers produce clothing at a textile factory that supplies clothing to fast fashion e-commerce company Shein in Guangzhou, southern China’s Guangdong province.
Jade Gao | AFP | Getty Images
China’s factory activity in April exceeded analysts’ expectations, but new orders slowed and the growth rate slowed from the previous month, which hit a yearly high.
The official manufacturing purchasing managers’ index of 50.3 was higher than the 50.1 expected by economists polled by Reuters.
The non-manufacturing PMI fell into contraction territory at 49.4 compared to 50.1 in March, with activity in both the services and construction sectors contracting. A number above 50 indicates an expansion of activity, and a number below 50 indicates a reduction in activity.
China’s composite PMI was 50.1, down from 50.5 in March.
“While the industry still looks relatively strong, services and domestic demand are showing some weakness, and expanding domestic demand remains high on the policy agenda,” said Hao Zhou, head of research and chief economist at Guotai Jun’an International Holdings.
Zhou said that while new order growth slows, both production and new orders remain in expansion territory, which will remain important support. The new orders sub-index for April was 50.6, down from 51.6 the previous month.
“The PMI index shows that the manufacturing industry has not been negatively affected by the Middle East conflict. The new export orders index actually exceeded 50 for the first time in two years,” said Zhiwei Zhang, president and chief economist of Pinpoint Asset Management. The new export orders sub-index for April rose to 50.3.
However, Mr Zhao warned that input prices were “soaring” as oil prices remained sensitive to tensions in the Middle East.
The data, combined with private PMI surveys by RatingDog and S&P Global, resulted in a manufacturing PMI of 52.2 compared to the expected 51, the strongest result since December 2020.
RatingDog said that “solid demand, operational improvements and new product launches resulted in the highest growth rate in production in nearly two years.”
China is preparing for a summit between President Xi Jinping and US President Donald Trump in May, where Beijing is likely to seek clarification on the threat of Section 301 tariffs.
President Trump’s “Emancipation Day” tariffs had been lifted based on a Supreme Court decision in early February, but the US president had moved quickly to impose a 10% tariff on all global imports to the US.
President Trump and President Xi met last year in Busan, South Korea, where the administration agreed to a trade truce that would reduce tariffs on Chinese goods to about 47% of the total, while Beijing promised to end broad export restrictions on rare earths.
—CNBC’s Evelyn Cheng contributed to this report.
