China’s manufacturing activity contracted last month, official figures showed yesterday, due to tapering global demand and slow domestic recovery after curbs related to the COVID-19 pandemic were lifted.
The official manufacturing purchasing managers’ index (PMI) — a key gauge of Chinese factory output — fell unexpectedly to 49.2 from 51.9 in March, and below the 50-point mark that separates expansion and contraction in activity, Chinese National Bureau of Statistics data showed.
Analysts polled by Bloomberg expected factory activity for last month to register at 51.4.
Photo: AP
The drop comes after February recorded the highest reading in more than a decade as factories returned to normal following a surge in COVID-19 cases.
China’s economy grew 4.5 percent in the first three months of the year as the country reopened after dropping strict health controls that helped keep the virus in check, but battered businesses and supply chains.
However, the world’s second-largest economy is also beset by a series of other crises, from a debt-laden property sector to flagging consumer confidence, global inflation, the threat of recession elsewhere and geopolitical tensions with the US.
The official non-manufacturing PMI, which measures growth in the services and construction sectors, fell to 56.4 from 58.2 in March.
The March reading was the highest since May 2011, as the country saw a surge in demand for travel, entertainment and other leisure services unavailable for nearly three years during the pandemic.
The government has set a comparatively modest growth target of about 5 percent this year, a goal Chinese Premier Li Qiang (李強) has said could be hard to achieve.
The Chinese Communist Party’s top policymaking body said in a statement on Friday that the economy faces headwinds from weak demand at home and the slow pace of reforms.
“China’s economy is mainly in the process of recovering, with [internal] driving forces still weak and demand insufficient,” the politburo said, as cited by the state-run Xinhua News Agency. “Economic transition and upgrading face new headwinds, and hardships... are still to be overcome to promote high-quality development.”
Beijing has promised further state support for the private sector, which is reeling from a regulatory crackdown on the property, technology and private education industries.
Policymakers are also looking for ways to push up domestic demand, as China’s export and manufacturing sectors struggle amid tepid global demand.
One bright spot in recent months has been households spending piled-up savings on travel.
Bookings for air and train tickets and hotel reservations for the five-day Labor Day holiday starting on Saturday all surpassed the levels recorded in the same period in 2019, before the pandemic hit, according to online Chinese travel agency Fliggy (飛豬).
“China’s service sector continues to grow strongly while the manufacturing sector shows signs of weakening,” Pinpoint Asset Management Ltd (保銀私募基金管理) chief economist Zhang Zhiwei (張智威) said.
“These mixed signals will likely keep the pressure on the government to continue its supportive fiscal and monetary policies in the second quarter,” he said.
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