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May 4, 2016

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PMI dips on weak manufacturing

CHINA’S manufacturing sector continued to see operating conditions deteriorate for the 14th month in April as new orders stagnated while exports fell for a fifth month, a private survey showed yesterday.

The Caixin General China Manufacturing Purchasing Managers’ Index, an indicator of manufacturing activity, dipped to 49.4 last month from 49.7 in March, showed the survey conducted by financial information service provider Markit and sponsored by Caixin Media Co.

The PMI, whose reading above 50 signals growth while one below 50 means contraction, is a composite indicator that provides a snapshot of operating conditions in the manufacturing sector.

Production was broadly flat in April as market conditions were weak and sluggish customer demand led firms to be cautious over their production schedules.

Overall employment fell as weak market conditions led some firms to downsize while others chose not to replace voluntary workers who left.

Average input costs rose for the second month as firms said higher raw material prices increased cost pressure.

“The fluctuations indicate the economy lacks a solid foundation for recovery and is still in the process of bottoming out, and the government needs to watch closely risk of a further economic downturn,” He Fan, chief economist at Caixin Insight Group, said in a statement.

A Sunday release by the National Bureau of Statistics and the China Federation of Logistics and Purchasing showed the official PMI at 50.1 last month, slightly down from March’s 50.2 but it stayed in expansion mode for a second month.

The Caixin PMI samples 420 small and medium-sized manufacturers and is quite volatile due to its small sample size and the dominance of small and private companies.




 

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