China’s manufacturing activity expanded modestly last month for the second straight month, but the rate of growth failed to accelerate, the Chinese government said yesterday as the world’s second-largest economy struggles to pick up steam.
The purchasing managers’ index (PMI) released by the Chinese National Bureau of Statistics came in at 50.1 last month, the same result as March, when the gauge showed growth for the first time this year.
The index, which tracks activity in factories and workshops, is seen as a key barometer of the country’s economic health. A figure above 50 signals growth, while anything below indicates contraction.
January’s reading of 49.8 was the first shrinkage in more than two years and added to worries about China’s economic outlook.
However, some analysts were cautiously optimistic.
“The continued expansion of the official PMI suggests that the growth momentum is picking up, though modestly, thanks to the rise of newly started projects and monetary policy easing,” ANZ economists Liu Li-gang (劉利剛) and Zhou Hao (周浩) wrote.
China’s economy expanded 7 percent in the first quarter, against 7.3 percent in the final three months of last year, the worst result since 2009 at the height of the global financial crisis. Beijing has unveiled several stimulus measures to support the economy, including two interest rate cuts since November last year and twice this year, reducing the amount of cash banks must keep in reserve.
Economists broadly expect more such measures this year.
“As the economy still faces strong headwinds and the risk of deflation has not diminished, the authorities will need to continue to roll out easing measures in the coming months,” the ANZ economists added.
Yesterday’s PMI announcement came after banking giant HSBC’s own survey of manufacturing activity showed a decline to a 12-month low last month, to 49.2.
Separately, a survey showed that the fall in Chinese house prices slowed last month after authorities loosened mortgage and tax policies in an attempt to boost the country’s slumping property market.
The average price of a new home in China’s 100 major cities edged down 0.01 percent month on month to 10,522 yuan (US$1,695) per square meter, the China Index Academy said in a report.
That marked a sharp slowdown in the pace of decline from the 0.15 percent recorded in March, the report said.
Home prices had declined for eight straight months until a slight increase of 0.21 percent in January, previous academy figures showed, before dropping again from February.
On a year-on year basis, house prices fell 4.46 percent last month, accelerating from 4.35 percent in March, according to the academy.
The average price in China’s top 10 cities was 18,961 yuan per square meter, down 3.46 percent from a year earlier, it said, accelerating from a decline of 3.19 percent in March.
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