The China’s manufacturing and service activity grew to a slower pace in Aprilofficial data showed on Tuesday, suggesting some loss of momentum of the world’s second largest economy at the beginning of the second quarter.
He cooling of activity compared to the notable increase in March highlights the erratic demand growth and highlights the challenges that economic leaders face, despite the fact that strong GDP results of the first quarter have partly reduced the urgency to intensify stimulus measures.
He purchasing managers index The National Bureau of Statistics (NBS) manufacturing PMI fell in April from 50.8 in March to 50.4, above the 50 mark that separates growth from contraction and just above the average forecast of 50.3 in a survey of Reuters.
The new export orders grew at a much slower paceMeanwhile he employment continued to contractaccording to NBS data.
The services subindex of the NBS non-manufacturing survey grew at the slowest pace since January, standing at 50.3 in April, down from 52.4 in March.
“The indicators of business activity in the sectors of the restorationmarket services capitals and the sector real estateHE they contracted“NBS said in a statement.
Another private factory survey—the Caixin report— also released Tuesday showed manufacturing activity grew faster as new export orders increased.
Analysts say the divergence between the Caixin PMI and the official PMI highlights differences in their geographic and sector coverage.
“Both the manufacturing and services PMI indexes are near the 50 linewhich reflects that the current momentum in economic expansion is slight,” he said. Zhou Maohuamacroeconomic researcher at China Everbright Bank.
Investors expect Chinese authorities launch more stimulus to support the economy and await clues from the monthly meeting of the Politburowhich is expected to focus on economic issues.
Given that the United States Federal Reserve and other developed economies are in no rush to cut interest rates, China could face a longer period of moderation in foreign demand. Besides, Beijing still faces trade barriersas the United States accuses China of exporting its excess industrial capacity.
The authorities stressed this year the need for a economic development based on innovation in advanced sectors.
However, analysts claim that the immediate problem of the country focuses on prolonged decline in the real estate sector and the heavy debt of local administrations, which have reduced the confidence of households and investors, which has been a serious setback for the economic outlook.
Several batches of Stimulus measures aimed at turning around the fortunes of the real estate sector have failed to spur a substantial recoverywhich is one of the main reasons why economists remain skeptical about a complete economic recovery in the short term.
Krishna SrinivasanIMF director for Asia and the Pacific, said on Tuesday that It would be beneficial for China to reduce aid to industries to reduce resource misallocation and excess capacity. Instead, it should be given priority to support domestic demand against supply policies, he stated.
Although the economic growth of the first quarter, higher than expected, has provided a positive boost for the rest of the year, the weakness in key areas such as retail sales of March, the industrial benefits and the real estate investment has made investors uneasy about China’s ability to spark a broad revival in demand.
China has set a goal of GDP growth of around 5.0% by 2024a goal that analysts have described as ambitious.
(With information from Reuters)
