Caixin manufacturing PMI grows 0.1 percent but exports fell for first time since November 2016

The Caixin report said the PMI showed operating conditions improved marginally across China's manufacturing sector. 

China's manufacturing activity remained steady in April while exports shrunk for the first time since November 2016, according to a private report today.

The Caixin China General Manufacturing Purchasing Managers’ Index inched 0.1 percent higher to 51.1 last month from March, according to the survey conducted by financial information service provider Markit and sponsored by Caixin Media.

The trend differed from the official PMI released by the National Bureau of Statistics on Monday which dipped 0.1 percent to 51.4.

The PMI is a composite indicator that provides a snapshot of operating conditions in the manufacturing sector. A reading above 50 indicates expansion, while a reading below reflects contraction.

The Caixin report said the PMI showed operating conditions improved marginally across China’s manufacturing sector. 

Although output rose slightly quicker, growth in new orders slowed amid a renewed fall in new export shipments. Consequently, purchasing activity rose only modestly while firms noted higher inventories of both inputs and finished items. 

"Growth of new business moderated for the second straight month, reflecting weakening demand across the manufacturing sector," said Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group. 

"Overall, operating conditions across China’s manufacturing sector continued to improve in April. But uncertainty in exports has increased significantly," Zhong added.

Manufacturers faced a sharply deteriorating foreign demand environment as new export orders declined for the first time in 17 months in April. Inflation for output costs eased slightly while growth in input costs posted its first rise  since September amid increases in crude oil prices. 

"This may squeeze the profit margins of manufacturers and has contributed to a decline in the sub-index of future output, a gauge of companies’ confidence in their business outlook over the next 12 months," Zhong said.

Inventories of finished goods grew faster in April from March, suggesting that supplies for manufacturers have remained rather high, according to the report.

Despite backlogs getting worse, staff numbers continued to fall and contributed to a further increase in unfinished workload. Price pressures were relatively muted, with both input costs and output charges rising slowly than those seen at the turn of the year.

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