China: PMI moderates after aggressive monetary tightening
May 1, 2011
The April Purchasing Managers' Index (PMI) published by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFPL) remained in expansion mode, albeit moderating gently. The PMI declined 0.5 percentage points over the previous month to 52.9%, contrasting expectations that saw the PMI rising to 53.9%. A reading above 50% indicates that the manufacturing sector is expanding, while a reading below 50% implies a contraction. The moderation was broad-based as eight out of eleven of the sub-indices registered lower readings over the previous month. The strongest declines were seen in new orders (-1.4%), imports (-1.4%) and new export orders (-1.2%), while the output index slipped a more subdued 0.4%. Meanwhile, input prices eased for the second consecutive month to 66.2% from 68.3% in March. Some analysts consider the lower PMI reading was mainly due to a faster currency appreciation and the ongoing monetary tightening efforts.