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China's official PMI shows factories continue to struggle

China's official manufacturing Purchasing Managers' Index stood at 50.1 in April, unchanged from March
China's official manufacturing Purchasing Managers' Index stood at 50.1 in April, unchanged from March

China's factories struggled to grow in April as domestic and export demand remained weak, reinforcing expectations that Beijing will roll out more measures to support the slowing economy. 

The official manufacturing Purchasing Managers' Index (PMI) stood at 50.1 in April.

This was identical to the previous month's reading and just above the 50-point mark that separates growth from contraction on a monthly basis.

Analysts polled by Reuters had predicted a reading of 50 as the world's second-largest economy continues to cool. 

The PMI index for new orders - a proxy for foreign and domestic demand - was unchanged at 50.2 in April from March.

New Chinese export orders contracted again and at a slightly faster pace, falling to 48.1 from 48.3 in March. 

Chinese manufacturers also continued to shed jobs, and at a slightly faster clip than in March.

Other data so far this year have indicated that the Chinese economy has lost steam despite two interest rate cuts since November, two reductions in the amount of money banks must keep in reserve and repeated attempts by the central bank to reduce financing costs. 

A private, preliminary HSBC/Markit PMI survey last week showed factory activity contracted at its fastest pace in a year in April, suggesting that economic conditions are still deteriorating despite increasingly aggressive policy easing by the central bank. 

Today's official survey looks more at larger, state-owned firms, which have been more resilient to the protracted downturn, partly due to generous government subsidies and better access to credit.

Unlike manufacturing, activity in China's services sector has remained largely robust, though it too is showing signs of cooling. 

The official services PMI fell to 53.4 in April from 53.7 in March, and the lowest since January 2014, the bureau said. 

Weighed down by a property downturn, factory overcapacity and high levels of local debt, China's economic growth is expected to slow to a quarter-century low of around 7% this year from 7.4% in 2014.

The economy grew at its slowest pace in six years in the first quarter of 2015 and weakness in key sectors suggested the economy was still losing momentum, intensifying Beijing's struggle to find the right policy mix to shore up activity.