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2nd LD Writerthru-China Focus: China's manufacturing activity expands at slower pace

Xinhua, May 1, 2016 Adjust font size:

China's manufacturing activity expanded for the second month in a row in April but at a slower pace, official data showed on Sunday.

The purchasing managers' index (PMI) came in at 50.1 in April, slightly down from March's 50.2 and below market expectations of 50.3, according to a report jointly released by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing.

A reading above 50 indicates expansion, while a reading below 50 reflects contraction.

"The Chinese economy is stabilizing since the reading still remains in positive territory, albeit falling slightly in April," said Zhang Liqun, a researcher with the State Council's Development Research Center.

NBS statistician Zhao Qinghe said the country's manufacturing activity kept steady growth last month, partly due to a recovering housing market and accelerated infrastructure construction.

Fixed-asset investment surged 10.7 percent year on year during the first quarter of 2016, and real estate investment jumped 6.2 percent from one year earlier, official data showed.

The sub-index measuring production stood at 52.2, slightly down from 52.3 a month earlier but higher than the first quarter's average of 51.3, according to the report.

Thanks to the government's pro-growth measures and supply-side structural reforms, market demand continued to rebound in April, Zhao said.

To help the country's manufacturing sector weather the downturn, the Chinese government has cut interest rates, reduced taxes, slashed overcapacity and initiated reforms to improve efficiency.

The sub-index for new orders settled at 51 percent, down 0.4 points from March but still the second-highest reading since last year.

Prices of raw materials continued an upward trend last month, with the sub-index for purchasing price standing at 57.6, the highest reading in almost two years.

Zhao warned that China's economy still faces downward pressures. Though remaining in positive territory, the growth in domestic and export orders faded slightly, which showed global headwinds may block further improvement in China's exports.

Factories made workers redundant at a slightly more rapid pace, with the employment sub-index down 0.3 point to 47.8.

This showed that the pressure on employment is mounting, Zhao said.

Activity in China's non-manufacturing sector, meanwhile, remained strong but grew at a slightly slower pace, with the official reading at 53.5 in April, compared with the previous month's 53.8.

Behind the headline data, it was the construction component of the index that drove continued resilience with a reading of 59.4, while the services component was weaker at 52.5.

Early signs for April were positive in that they showed a continued improvement in conditions, but uninspiring because the pace of improvement remains moderate, according to a Bloomberg research note.

With new lending booming in the first quarter, fiscal policy more expansionary and the yuan more supportive, tailwinds for resilient growth will continue to blow in the months ahead, it said. Endi