China: Manufacturing and non-manufacturing PMIs pull back in April
The manufacturing Purchasing Managers’ Index (PMI) published by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP) fell from 51.9% in March to 51.1% in April, below the 51.7% expected by market analysts. As a result, the index remained above the 50.0% threshold that separates expansion from contraction in the manufacturing sector. The reading was driven by slower growth in output and new orders. The PMI fell for large- and medium-sized firms, but rose for small firms. In contrast, the Caixin manufacturing PMI rose in April.
Looking at the non-manufacturing sector, the NBS’ PMI stood at 54.9%, down from 56.3% in March, amid weaker business activity and new orders growth.
Regarding April’s reading, Ho Woei Chen, economist at United Overseas Bank, commented:
“We think that the larger-than-expected drop in the CFLP PMIs likely indicated a moderation in expectations during April following the surge in March, when both sets of PMIs rebounded sharply towards their November peaks. Factors such as supply bottlenecks especially in the electronics industry as well as higher transportation costs may have weighed on the manufacturing outlook while services could be affected by expectation of slower credit growth ahead. […] Importantly, the CFLP manufacturing and non-manufacturing PMIs have continued to remain in expansion since March 2020 while the Caixin manufacturing PMI has stayed in expansion since May 2020. This suggests that the outlook is still positive despite the moderation in the official PMIs.”