China's manufacturing and services improved
slightly in April with teh the final HSBC Manufacturing Purchasing Managers' Index
(PMI) for April published
Monday, showing a slight rise to 48.1 from 48.0 in March, but still below the key 50 level
which suggests continuing contraction in manufacturing. The official manufacturing index, which
was published last week and tracks more big state
companies than the HSBC measure, showed that activity strengthened slightly to
50.4 in April from 50.3 in March while the official non-manufacturing PMI, which
covers services, also improved slightly in April.
Production at Chinese manufacturers fell for the third
consecutive month in April, though at a weaker pace than in March. Panellists
generally attributed the latest reduction of output to fewer new orders, which
decreased at a marked rate in April. Data suggested that sluggish domestic
demand predominantly led to the fall in total new business, as new export orders
declined only slightly. Weaker client demand was attributed by a number of
survey respondents to deteriorating market conditions.
Goods producers in China cut their staffing levels for the
sixth month running in April, amid reports of company down-sizing policies which
stemmed from lower production requirements. Moreover, the rate of job shedding
accelerated from the previous month. Despite reduced workforce numbers, volumes
of unfinished work fell for the third successive month in April. That said, the
rate of backlog depletion was marginal.
Fewer new orders led manufacturers to cut back on their
purchasing activity in April. However, the pace of reduction was only slight,
having eased from that seen in March. Firms also depleted their stocks of
purchases at a marked rate in April, reflective of efforts to lower inventories
in line with weaker client demand.
Average input costs faced by Chinese goods producers fell
for the fourth consecutive month in April. Despite easing from March, the rate
of reduction was solid overall. Factory gate prices also fell during April, and
at a solid pace. Anecdotal evidence suggested that charges were cut to boost
Hongbin Qu, chief economist,
China & Co-Head of Asian Economic Research at HSBC said:
"The final reading of the HSBC China
Manufacturing PMI stabilised at 48.1 in April, up slightly from 48.0 in March,
and revised down from an earlier flash reading of 48.3. The latest data implied
that domestic demand contracted at a slower pace, but remained sluggish.
Meanwhile, both the new export orders and employment sub-indices contracted, and
were revised down from the earlier flash readings.
These indicate that the
manufacturing sector, and the broader economy as a whole, continues to lose
momentum. Over the past few days, Beijing has introduced more reform measures
which could support growth by inducing more private sector investment. We think
bolder actions will be required to ensure the economy regains its momentum."