BEIJING • The first official gauge of China’s manufacturing sector fell last month, signalling that the economic stabilisation seen in the first quarter remains fragile.
The manufacturing Purchasing Managers’ Index (PMI) stood at 50.1, down from 50.5 in March, according to the National Bureau of Statistics. The non-manufacturing PMI – a gauge of services and construction – stood at 54.3 versus 54.8.
The data may allay some concerns about China, but there is still uncertainty about what will happen with the world’s second-largest economy.
While growth was stronger than expected in the first quarter, there is no clear sign of what a trade deal with the United States will look like. Falling imports are both undercutting the regional economy and indicating weak domestic demand.
“Today’s PMI data suggest the strong pace of March activity is unlikely to continue,” said Societe Generale economist Michelle Lam.
“Nevertheless, activity has at least gained more traction compared with the turn of the year.
“The feed-through of tax cuts should put the economy on a stable footing going forward.”
New orders softened to 51.4 from 51.6, while new export orders recovered to 49.2, still in contraction but much higher than in the first three months of the year.
A different PMI from Markit Economics showed a similar trend, with the factory gauge dropping to 50.2 from 50.9.
Economists had expected the data to be basically unchanged from March, when the factory gauge rebounded over the reading of 50 and back into expansion territory. That comes after a stronger-than-expected first quarter, with gross domestic product expanding 6.4 per cent and industrial output jumping 8.5 per cent.
“With a strong first-quarter GDP, growth doesn’t seem to be a big concern” and a number above 50 is already a good start for the second quarter, said ANZ economist Raymond Yeung. “New export orders are a silver lining.”
Asian stocks retreated with US futures yesterday amid disappointing readings on China’s manufacturing and earnings at Samsung Electronics.
The Australian dollar, a proxy for bets on China’s economy, ticked lower after the data.
BLOOMBERG