China manufacturing weakens in April private survey shows
Date
5/3/2016 11:11:15 PM
(MENAFN- The Peninsula) Women work on a pollution mask assembly line at the ASL Masks factory in Dongliu China's Shandong province. AFP
Beijing: Chinese factory activity weakened further in April a private survey indicated Tuesday as muted demand and market weakness hit the struggling export-oriented sector.
The Purchasing Managers' Index by Caixin which tracks activity in the country's factories and workshops fell to 49.4 for April a 0.3 point drop from the month before and the 14th consecutive month of decline.
A reading above 50 signals expanding activity while anything below indicates shrinkage.
He Fan chief economist at Caixin Insight Group 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 straight 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 darker than official data released 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.
Analysts said the official reading in April argues against extra stimulus to avoid fuelling housing prices or flooding sectors already over capacity with cheap credit.
"As investment recovered the property market turned around and infrastructure construction speeded up" the National Bureau of Statistics said in a statement.
Julian Evans-Pritchard of Capital Economics 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 said 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".
Beijing has been trying to retool its economy to encourage domestic consumption and move away from infrastructure investment and exports as the main drivers of growth.
But the transition is proving bumpy and the growth slowdown has alarmed investors worldwide.
Chinese stock markets shrugged off the latest figures with the benchmark Shanghai Composite Index up 1.60 percent by the noon break Tuesday.
China's economy a vital driver of global expansion grew 6.9 percent last year its weakest rate in a quarter of a century.
Leaders have targeted a growth range of 6.5-7.0 percent this year.
AFP