The manufacturing sector in China slipped further into contraction territory in April, the revised survey from HSBC Bank showed on Monday, with a PMI score of 48.9.
That missed forecasts for 49.4, and it’s down from last month’s preliminary reading that suggested a score of 49.2.
It’s also down from the March score of 49.6, and it moves further beneath the boom-or-bust score of 50 that separates expansion from contraction.
“China’s manufacturing sector had a weak start to Q2, with total new business declining at the quickest rate in a year while production stagnated. Fewer new orders appeared to stem from weaker domestic demand, as new business from abroad showed tentative signs of improvement,” said Markit economist Annabel Fiddes.
Chinese manufacturers saw a further deterioration in operating conditions in April, with total new orders declining at the strongest pace for a year while production levels stagnated. Data suggested that relatively weak domestic demand was the main driver of reduced new business, as new export work picked up in April, albeit marginally.
Consequently, employment in the sector continued to decline, while purchasing activity fell at the quickest rate in 13 months. Meanwhile, deflationary pressures intensified in April, with both input and output costs falling at accelerated rates.
Total new business placed at Chinese manufacturers declined for the second month in a row in April as the rate of contraction quickened since March to the strongest in a year.
Weaker demand conditions led companies to become more cautious with regard to their production schedules, with firms leaving their output unchanged in April. This contrasted with increased output in the opening three months of the year.
Purchasing activity meanwhile declined for the first time since January. Though moderate, the rate of reduction was the quickest since March 2014.
On the price front, average cost burdens faced by Chinese goods producers fell for the ninth successive month. Moreover, the rate of deflation accelerated to a sharp pace. In line with the trend for input costs, companies cut their selling prices again in April and at a solid rate.
“Further job cuts and reduced purchasing activity suggest that the sector may struggle to expand in the near-term. Furthermore, the PMI data indicate that more stimulus measures may be required to ensure the economy doesn’t slow from the 7% annual growth rate seen in Q1,” Fiddes said.
The material has been provided by InstaForex Company – www.instaforex.com