China’s Caixin manufacturing Purchasing Managers Index for April comes in at 49.5, compared to expected 50.3 and a reading of 50 in the previous month.
Sub-indexes showed the manufacturing industry’s supply grew at a slower pace and although the production sub-index remained above 50, it hit the lowest in three months.
Demand ended two months’ expansion, with the new order sub-index slightly lower than 50 mainly due to weak demand and reduced consumer spending, and among the three major categories of products, sales of intermediate and investment goods declined, offsetting the growth in consumer goods sales.
The new export order sub-index returned to expansion, though the increase was moderate, and some companies said the adjustment of epidemic control policies has made exports easier, but the global economic downturn still curbs export orders.
The employment sub-index slipped deeper into contraction and hit the lowest in three months. The shortage of personnel combined with insufficient production has led the sub-index for backlog to hit the highest since November 2021.Prices in the manufacturing industry declined, with both raw material purchase prices and factory price in contraction and hitting the lowest since February 2016 and January 2016, respectively.
However, the sub-index for manufacturers’ confidence hit the second highest in nearly two years and companies mostly believe that as the impact of the epidemic eases, customer demand will strengthen and market condition will further improve.
The manufacturing sector’s business confidence weakened in April, indicating that the foundation for economic recovery is not solid, and after the short-term release of pent-up demand in the market, the sustainability of economic recovery remains uncertain, said Wang Zhe, a senior economist at Caixin Insight, said in a report.
Employment is a prominent issue facing the economy, and the employment situation for young people is particularly severe, he said.
Deflation has recently become a hot topic and the rapid decline in cost-side and factory-gate price indices should be paid attention, he said.
Going forward, the government’s policies should focus on promoting domestic demand, stabilizing employment, and improving expectations, smoothing the transmission mechanism of monetary policy, and helping the economy achieve a virtuous cycle, he added.