China's Latest Data Could Worry Government Economists
This January 25 photo shows a container ship sailing by the northeastern Chinese city of Qingdao, Shandong Province. China’s manufacturing PMI index for April suggested export orders had expanded for a second straight month, though at a slower pace than in March.
China’s manufacturing activity in April expanded for the second straight month, according to the country’s statistics bureau, but by a slimmer margin than in March.
The headline Purchasing Managers Index (PMI) announced Tuesday was 50.4, 0.4 points less than the growth shown in the March report, which had sparked hope after five straight months of contraction in the manufacturing sector.
The new data indicates the world’s second-largest economy has still not found its footing amid tepid consumer confidence, an ongoing property sector crunch and indebted local governments.
The PMI composite index is considered a barometer of economic trends in that sector. It is typically calculated from five variables weighted at 20 percent apiece: production, new orders, supplier delivery times, inventories and employment.
These five subindices are based on monthly surveys of industry supply chain managers. A PMI of over 50, known as the critical point, suggests industry expansion compared to the previous month, while a score of 49 and lower indicates contraction.
Production expanded to 52.9 from 52.2 in March, a markedly slimmer margin than the 2.4-point jump from February to March.
New company orders stood at 51.1, suggesting slowing demand since March. That index given for March (53) had marked significant expansion since February (49).
The index for new export orders was 50.6, still in expansion territory but just barely. This figure comes on the heels of the whopping increase of 5 points of growth logged in March (51.3).
Inventory levels for finished products received a score of 47.3, down from 48.9 in March. With less unsold inventory on the shelves, demand for these goods appears to have been somewhat higher.
Raw material inventories remained unchanged from March at 48.1.
Purchasing managers’ aggregated score for employment was 48 in April. It was the 14th straight month of contraction in this index, indicating employers are still hesitant to hire.
The suppliers’ delivery times shortened slightly, down to 50.4 from 50.6 the previous month.
A separate PMI survey published by Caixin reported an even higher headline PMI of 51.1 for March on the heels of its 50.9 reading in February.
A private sector survey, the Caixin/S&P Global manufacturing PMI, suggested a higher rate of expansion than China’s official numbers. The PMI from that poll was 51.1, a rise of 0.3 since March.
Newsweek reached out to the Chinese Foreign Ministry via written request for comment.
The PMI survey results were released following China’s economic report for the first quarter. China’s GDP was reported to have grown by 5.3 percent year-on-year, beating expectations.
However, much of this expansion occurred in the first two months of the year, with growth slowing or even reversing in several key sectors.
Chinese Communist Party leaders in July will gather for the Third Plenum, a key meeting that many economists hope will produce more robust measures to stimulate the economy than have been seen since the end of the country’s pandemic-era lockdowns.
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