New Delhi, May 04: HSBC’s China Purchasing Managers’ Index (PMI) dropped in April to a six-month low of 55.4 from 57.0 in March as output, new orders and employment all slowed.
But the survey reading was well within the range tracked since late last year, suggesting that the Chinese manufacturing sector was still growing briskly, if not overheating as some economists have warned.
It was the 13th straight month that the HSBC index, designed to provide a timely snapshot of business conditions, stood above the watershed mark of 50 that indicates an expansion of factory activity.
“April’s PMI points to a moderate slowdown in the expansion of manufacturing activity,” Qu Hongbin, chief economist for China at HSBC, said in a statement that accompanied the survey’s release on Tuesday.
“We see this as good news because it means that Beijing’s policy tightening is starting to cool the overheated economy, which will help to contain inflationary risks in the coming quarters,” he said.
In a sign that inflationary pressures remain considerable, the sub-index measuring output prices climbed to a three-month high of 57.0 in April from 54.2 a month earlier.
The official PMI for April, produced for the National Bureau of Statistics and released on Saturday, rose to 55.7 from 55.1 in March. The official survey also showed growing inflationary pressure.
Markit, the British research firm that compiles the HSBC index, highlighted the following findings:
— Output expanded at the slowest pace since July last year, but it was still faster than the long-run series average, powered in part by strong growth of new business and the start of new production lines.
— The survey signalled that export sales rose again in April, but the rate of increase eased from March’s near-record to the slowest since July 2009.
— Input prices rose sharply, hitting a three-month high, on the back of higher raw material costs.
— Employment in the Chinese manufacturing sector rose for the 11th straight month, but the rate of growth was modest, slower than the average in the first quarter of this year and the second half of last year.
—-Agencies