China April factory growth slows to weakest in 7 months: Caixin PMI

BEIJING • China's factory sector lost momentum in April, with growth slowing to its weakest pace in seven months as domestic and export demand faltered and commodity prices fell, a private survey showed yesterday.

The findings echoed those in official manufacturing and service sector data on Sunday, reinforcing views that China's economic growth remains solid but is starting to moderate after a surprisingly strong start to the year.

The Caixin/Markit Manufacturing Purchasing Managers' index (PMI) fell to 50.3 in April, missing economist forecasts' of 51.0 and a significant fall from March's 51.2.

The index remained above the 50.0 mark which separates expansion from contraction on a monthly basis, but only just, and grew at its slowest pace since September last year.

The private factory survey suggested growth faded at a sharper pace than the official reading, but economists attributed the softening in both cases to a pullback in global commodity prices and signs of moderating in China's red-hot housing market after a flurry of government cooling measures.

ANZ's senior China economist Betty Wang said many companies had "too strong" a bullish view when global commodity prices began rallying late last year, but that trend is changing, making firms more cautious about spending.

Coupled with more property tightening measures hitting the real estate sector - a major driver for China's economy - since March, market expectations may have started to reverse, she add.

The private survey showed production growth and total new orders rose at the slowest pace since last September, with both showing only slight improvement from the previous month.

Sharp falls in prices of iron ore, steel and other raw materials led to a cooling in producer price inflation, which has helped some companies, such as steel mills and smelters, post their strongest profits in years.

The official manufacturing PMI fell less sharply but still slid to a six-month low of 51.2 in April from March's near five-year high of 51.8, data at the weekend showed. Analysts expected a reading of 51.6.

Growth in China's services sector slowed to 54.0 in April, from the previous month's 55.1, but remained robust.


A version of this article appeared in the print edition of The Straits Times on May 03, 2017, with the headline 'China April factory growth slows to weakest in 7 months: Caixin PMI'. Print Edition | Subscribe