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China Manufacturing Activity Logs Marginal Improvement

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China's manufacturing sector logged further improvement, albeit modest, in April on faster output growth, survey data from IHS Markit showed Wednesday.

The Caixin Purchasing Managers' Index rose slightly to 51.1 in April from 51.0 in March. A score above 50 indicates expansion in the sector.

Operating conditions have strengthened in each of the past 11 months though the pace of improvement was only marginal.

Despite picking up slightly since March, manufacturing output growth was moderate in April. Output was raised in line with higher new order inflows.

However, due to weaker overseas demand, new business grew at the slowest pace for seven months. Subdued demand conditions coincided with a further reduction in headcounts in April.

Inflationary pressures were relatively muted in April, with the rate of input price inflation little-changed from March and output charges rising only moderately.

Confidence towards the activity in the year ahead dipped to a four-month low in April, with some firms citing concerns over future market conditions and the strength of global demand.

"Operating conditions across China's manufacturing sector continued to improve in April. But uncertainty in exports has increased significantly, and the dependence of the Chinese economy on domestic demand is rising," Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, said.

Julian Evans-Pritchard, an economist at Capital Economics, said the stability of the PMI suggests there is little immediate cause for concern over the health of China's economy.

"Looking ahead, we doubt this stability will be sustained for much longer given the drags on economic activity from regulatory tightening and slower credit growth," the economist added.

by RTTNews Staff Writer

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