Investing.com - The Caixin Manufacturing PMI for April came in at 49.4, below the 49.9 expected, and headed deeper into contraction territory.
"The Caixin China General Manufacturing PMI for April came in at 49.4, down 0.3 points from March's reading. All of the index's categories indicated
conditions worsened month-on-month, with output slipping back below the 50-point neutral level. The fluctuations indicate the economy lacks a solid foundation
for recovery and is still in the process of bottoming out. The government needs to keep a close watch on the risk of a further economic downturn," Caixin
Insight Group chief economist He Fan said.
At the weekend, the China April CFLP manufacturing index came in at 50.1, below expectations, but hanging onto expansion territory. The CFLP service PMI eased to 53.5 from 53.8.
The semi-official manufacturing PMI from the China Federation of Logistics and Purchasing and National Bureau of Statistics slid from the first over-50 reading in eight months in March.
On the positive side, this is still the second consecutive over-50 reading - the first time that's happened since the middle of last year. Although gauges of output, new orders and export orders slipped marginally, they are still around the average of the past year.
The CFLP tried to downplay the slide in the manufacturing PMI, saying in an accompanying statement that "the stabilizing and recovering trend of the economy remains intact. The modest drop in the index is a normal fluctuation."
"We don’t think the drop in all three PMIs in April necessarily signals a loss of economic momentum at the start of Q2," Capital Economic said in a note to clients.
" The PMIs were probably given a boost in March by the re-opening of factories and business after Chinese New Year. Year-to-year shifts in the timing of the holiday mean that seasonal adjustments often do not fully iron out such effects. As a result, it arguably makes more sense to compare the latest readings with the average for Q1 as a whole. On this basis, the PMIs are consistent with a continued recovery at the start of Q2."
"n particular, there are few signs in the latest readings that the ongoing property rebound, a key driver of the recent recovery, is losing steam. The construction component of the non-manufacturing PMI rose in April for a second straight month, from 58.0 to 59.4. Meanwhile, construction firms were the most upbeat on record on their future prospects. Price pressures also appear to be heating up, reaffirming our view that deflation fears have been overdone. All three price components of the manufacturing PMIs are now at their highest levels in over three years. The upshot is that although they missed expectations, the latest PMI readings do little to alter our view that China is in the midst of a cyclical rebound that should continue for at least another couple of quarters."