The reading missed expectations of 50.3 in a Reuters poll
and marked the first contraction since January when the "exit
wave" from zero-COVID policies hit production lines. The
50-point index mark separates growth from contraction on a
monthly basis.
The reading echoes a similarly disappointing official PMI
released on Sunday and reflects the uneven nature of China's
economic recovery, with services consumption, a key growth
driver in the first quarter, outperforming manufacturing.
Along with a subdued property market and a deep slump in
industrial profits, analysts say the economy faces continued
headwinds.
"This suggests that China's economic recovery significantly
slowed after COVID-19 infections peaked at the start of this
year," said Wang Zhe, economist at Caixin Insight Group.
"It remains to be seen if the rebound is sustainable after a
short-term release of pent-up demand. The Caixin China
manufacturing PMI in April, in particular, pointed to the fact
that the economic recovery has yet to find a stable footing."
Production growth slowed for the second straight month in
April as weaker-than-anticipated new orders dampened output, the
survey showed.
New orders shrank for the first time in three months due to
sluggish market conditions and softer-than-expected customer
spending. New export orders swung back to growth from the
contraction in March.
Muted client demand led manufacturers to cut their staffing
levels at the quickest pace since January. This was mostly
through attrition, though some firms also trimmed headcount to
cut costs.
Both input costs and selling prices at factories slumped at
the quickest rate in about seven years. Lower costs for some raw
materials and fuel were linked to the renewed drop in expenses,
supporting a steeper reduction in selling prices as firms looked
to attract new business.
Despite the downbeat data, manufacturers' optimism picked up
with firms citing new product releases and supportive government
policies. Investment in new equipment was also expected to drive
growth, some said.
The soft demand has caught the attention of policymakers
with the Politburo, a top decision-making body of the ruling
Communist Party, stressing last week that boosting demand is key
for a sustained recovery.
(Reporting by Ellen Zhang and Ryan Woo; Editing by Sam Holmes)
BEIJING, May 4 (Reuters) - China's factory activity
unexpectedly dipped in April, a private sector survey showed on
Thursday, due to softer domestic demand and suggesting the
manufacturing sector is losing momentum amid a bumpy post-COVID
economic recovery.
The Caixin/S&P Global manufacturing purchasing managers'
index (PMI) fell to 49.5 in April from 50.0 the previous month
prior.
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