BEIJING (Reuters) – China’s factory activity likely grew at a slower pace in April, a Reuters poll showed on Friday, pointing to the strain on manufacturing from weak global demand and a slow recovery in the long-stricken domestic real estate sector.
The official purchasing managers’ index (PMI) for manufacturing is likely to have declined to 51.4 in April from 51.9 in March, according to the median forecast by 23 economists in a Reuters poll.
An index value above 50 indicates a monthly expansion in activity, a value below a contraction.
China’s economy grew faster-than-expected in the first quarter as the end of strict COVID restrictions eased businesses and consumers out of crippling pandemic disruptions.
However, uncertainties stemming from the global banking crisis and slowing growth in major economies hurt demand for Chinese goods, increasing pressure on manufacturers and around 180 million jobs in the trade sector.
“The China Containerized Freight Index was down in April from the previous month, suggesting some weakness in new export orders,” Bansi Madhavani, senior economist at ANZ, said in a research note on Friday.
Domestically, Barclays economists noted that some steelmakers are cutting capacity ahead of this week’s Politburo meeting and also amid weak demand from the housing sector.
“Demand from infrastructure could also ease off March levels with the issuance of smaller special bonds by local governments.”
Sentiment for China’s real estate sector, for years a pillar of growth in the world’s second-largest economy, has been rocked by multiple crises since mid-2020, including developer defaults and stalled construction of pre-sold housing projects.
Supportive measures from policymakers have helped improve sentiment in the industry, although vulnerabilities remain and a full recovery appears a long way off.
The official manufacturing PMI, which largely focuses on large and state-owned companies, and its services sector survey are released on Sunday.
The story goes on
Markets also follow the Politburo meeting, when a senior Communist Party decision-making body discusses the economy.
Policymakers this week unveiled plans to boost trade and jobs — one of the two biggest challenges facing the economy as it awaits a strong post-COVID start.
(Survey by Madhumita Gokhale and Anant Chandak; Reporting by Ellen Zhang and Ryan Woo; Editing by Shri Navaratnam)
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