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China’s Factory Outlook Eases as Economic Recovery Moderates

Economic IndicatorsApr 30, 2021 03:54
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© Reuters.

(Bloomberg) -- A gauge of China’s manufacturing industry slipped in April and the services sector also weakened, suggesting the economy is still recovering but at a slower pace.

  • The official manufacturing purchasing managers’ index fell to 51.1 in April from 51.9 in the previous month, the National Bureau of Statistics said Friday, lower than the median estimate of 51.8 in a Bloomberg survey of economists.
  • The non-manufacturing gauge, which measures activity in the construction and services sectors, dropped to 54.9, compared to 56.1 projected by economists. Readings above 50 indicate an expansion in output.

Key Insights

  • The latest data adds more caution to China’s outlook after the economy showed more balanced growth in the first quarter as retail sales climbed and industrial output growth moderated.
  • Manufacturers, especially those in upstream sectors, are benefiting from rising prices and profits, while the U.S. fiscal stimulus is giving a boost to exporters, allowing them to increase production. However, measures to contain carbon emissions in heavy-polluting industries may be weighing on some manufacturing output.
  • Stronger consumer confidence is lifting services industries, especially after travel restrictions imposed earlier in the year were lifted. The outlook for construction is more complicated though, with local governments slowing the pace of debt sales to finance infrastructure projects and approvals for fixed-asset projects dropping sharply in the first quarter compared with previous years. The real estate sector is also faced with stricter financing rules.

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  • A sub-index of new export orders for factories eased to 50.4 in April from 51.2 in the previous month, while new orders were at 52.
  • A sub-index of manufacturing employment was at 49.6, while non-manufacturing employment was 48.7.
  • High-frequency indicators tracked by Bloomberg show the economy continued to boom in April from the record growth in the first quarter, with strong exports and rising business confidence supporting the recovery.

©2021 Bloomberg L.P.

China’s Factory Outlook Eases as Economic Recovery Moderates

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