China's manufacturing activity improves in April

Thursday 01 May 2014 12.26
Manufacturing activity in China improves in April
Manufacturing activity in China improves in April

China's manufacturing activity improved in April, the government said today, showing increased strength for a second month in a row as the country's broader economy slows. 

The official purchasing managers index (PMI) was 50.4 in April, the National Bureau of Statistics said in a statement, up from 50.3 in March. 

The index tracks manufacturing activity in China's factories and workshops and is a closely watched indicator of the health of the economy. A reading above 50 indicates growth. 

The result matched the median forecast in a survey of 11 economists by Dow Jones Newswires. 

A preliminary estimate published by British bank HSBC put China's PMI at 48.3 in April, better than 48 in March. HSBC is scheduled to release its final reading for April on Monday. 

"The improvement of both PMIs reflects that a cyclical upturn is underway supported by the recent pro-growth targeted policies, and suggests that China's growth momentum is stabilising," ANZ Bank economists Liu Li-Gang and Zhou Hao said in a research note.

But Zhang Zhiwei, economist with Nomura International in Hong Kong, urged caution despite the improving PMI.

"We do not believe the economy has passed a turning point," he wrote in reaction to the result, adding that growth is set to slow to 7.1% in the second quarter.

"We expect the government to loosen fiscal and monetary policies in the next few months," Mr Zhiwei added.

Today's data, the first official reading on the world's second-largest economy in the current second quarter, came after China's economic growth for the first three months of 2014 came in at its weakest pace in 18 months. 

Gross domestic product (GDP) grew 7.4% in the first quarter from the same period the year before, weaker than the 7.7%in the October-December period. 

The result was the worst since a similar 7.4% expansion in the third quarter of 2012.

China's leadership says it wants to make private demand the key driver for the country's economic growth, moving away from over-reliance on huge and often wasteful investment projects that have girded decades of expansion. 

Such a transformation is expected to result in growth that is slower but seen as stable and more sustainable in the long run.

China in March set its annual growth target for this year at about 7.5%, the same as last year.