Chinese factory activity weakened further last month, a private survey indicated yesterday, as muted demand and market weakness hit the struggling export-oriented sector.
The Purchasing Managers’ Index (PMI) by Caixin, which tracks activity in the nation’s factories and workshops, fell to 49.4, a 0.3 point drop from March and the 14th consecutive month of declines. A reading above 50 signals expanding activity, while anything below indicates shrinkage.
Caixin Insight Group (財新智庫) chief economist He Fan (何帆) said all of the index’s categories worsened month-on-month, indicating that the world’s second-largest economy “lacks a solid foundation for recovery and is still in the process of bottoming out.”
“The government needs to keep a close watch on the risk of a further economic downturn,” he added.
The key manufacturing sector has been struggling for months in the face of sagging global demand for Chinese products.
The Caixin figures showed that new export work fell for the fifth consecutive month and factories continued to shed workers at a rate “only fractionally slower” than the post-financial crisis record set in February, it said.
The figures were weaker than official data released on Sunday, which showed expansion for the second successive month at 50.1.
The Caixin reading puts a greater emphasis on smaller firms than the official statistics.
Capital Economics analyst Julian Evans-Pritchard said the latest data were disappointing and weaker than expected, but nevertheless reiterated an upbeat view on the short-term outlook for China’s economy.
“There are few signs in the latest readings that the ongoing property rebound, a key driver of the recent recovery, is losing steam,” he wrote in a note, adding that the figures do not “alter our view that China is in the midst of a cyclical rebound that should continue for at least another couple of quarters.”
Chinese stock markets shrugged off the latest figures, with the benchmark Shanghai Composite Index up 1.8 percent to close at 2,992.64 points yesterday.
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