China's April Caixin PMI disappoints, slower increases in output and new orders

China's Caixin PMI for the month of April came at 50.3 vs 51.2 exp and 51.7 last, with slower increases in output and new orders key factors weighing on the headline index reading in April.

Summary

Latest data indicated that Chinese manufacturers started the second quarter with a further slowdown in production and new business growth. Employment across the sector meanwhile declined at the fastest pace since the start of the year and input buying rose only slightly. At the same time, optimism towards the 12-month outlook was the weakest seen in 2017 so far. Cost pressures continued to ease from the peaks seen at the end of last year, and contributed to only a modest rise in prices charged.

Commenting on the China General Manufacturing PMI™ data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said: “The sub-indexes of output and new business both fell to the weakest levels since September, while the employment index dropped to the lowest in three months. Stocks of finished goods stayed in contraction territory and companies were rather reluctant to restock. The input prices index declined for the fourth straight month while the output prices index fell for the fifth month running, although both remained above the breakeven point of 50."

"“The downward pressure on manufacturing gradually emerged in April, with all indicators weakening. The Chinese economy may be starting to embrace a downward trend in the near term as prices of industrial products decline and active restocking comes to an end" Dr. Zhong added.