Weak export demand affects factory activity
Print Edition
CHINA’S manufacturing activity expanded at its weakest pace in four months in March as export demand faltered, prompting companies to shed staff more quickly as they looked to cut costs, a private survey showed yesterday.
The Caixin/Markit Manufacturing Purchasing Managers’ index fell to 51.0 in March from February’s 51.6, countering economists’ hopes for a slight uptick to 51.7.
While the index remained above the 50-point mark that divides growth from contraction on a monthly basis, it was the weakest reading since November.
The findings contrasted with official data on Saturday, which showed manufacturing growth picked up more than expected in March in response to stronger domestic and overseas demand.
The two reports often diverge due to differences in the number and type of businesses surveyed.
The Caixin PMI, which tends to focus on smaller firms, suggested output and new orders grew only modestly in March, with growth in export orders slumping to a 10-month low even as fears grow of a possible trade war between the US and China.
The survey cited subdued foreign demand and the pace of production level growth slackened. A resurgent yuan could also be weighing more on smaller exporters.
The currency has gained more than 3 percent against the US dollar this year, on top of a 6.7 percent rise in 2017.
Chinese manufacturers also continued to reduce headcounts in March to cut costs, with the rate of job shedding still modest but the quickest since last August, the survey showed.
“Overall, the manufacturing PMI reading in March showed that demand was not as strong as expected, leading to lower willingness of manufacturers to produce and restock,” Zhengsheng Zhong, director of Macro-economic Analysis at CEBM Group, said in a note accompanying the release.
“However, the ability of manufacturers to make a profit was beefed up by the stable increase in new orders and the much slower jump in input costs.”
Input price inflation continued to cool, hitting a nine-month low, while firms raised their selling prices at a slightly quicker pace than the previous month.
But many businesses appear to believe the weakness in March orders was only a soft patch, with optimism about the one-year outlook picking up to the highest in a year, underpinned by expectations that greater investment, improved market conditions and new products will all help to boost demand.
Overall, China’s economic data so far this year suggest the economy has carried solid growth momentum into the first quarter from last year, with a government think tank forecasting the economy will grow 6.9 percent in the first half.
“The growth momentum of the Chinese manufacturing economy may have weakened in March, but at a marginal pace,” said CEBM Group’s Zhong.
Economists are sticking to forecasts that China’s pace will slow to around 6.5 percent by the end of the year, weighed down by the cooling property market and rising borrowing costs.
China is aiming for economic growth of around 6.5 percent this year, the same target as in 2017, while pressing ahead with its campaign to reduce risks in the financial system, Premier Li Keqiang said in March.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
