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China’s factory activity holds up, signaling recovery has legs
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
The official manufacturing purchasing manager index was 50.4 in April, the National Bureau of Statistics said on Tuesday. That compares with a median forecast of 50.3 in a Bloomberg survey, and a figure of 50.8 last month. Any reading above 50 points to an expansion.
China’s factory activity expanded for a second month, the best streak in more than a year, bolstering hopes that the rebound in the world’s second-biggest economy can be sustained.
The official manufacturing purchasing manager index was 50.4 in April, the National Bureau of Statistics said on Tuesday. That compares with a median forecast of 50.3 in a Bloomberg survey, and a figure of 50.8 last month. Any reading above 50 points to an expansion.
The non-manufacturing measure of activity in construction and services was 51.2, compared with a forecast of 52.3 and a March reading of 53.
The factory gauge offers encouragement to Chinese policymakers who are relying on the country’s industrial producers to offset weak domestic demand and help the economy meet this year’s growth target of around 5%. It’s the first major signal of China’s economic activity in the second quarter of 2024. In the first quarter, an initial bounce was followed by a slowdown in March across a slew of indicators.
Analysts say Beijing will likely need to boost public spending and cut interest rates in order to hit its growth goal, amid concern that a lopsided recovery will be hard to sustain as household spending remains weighed down by China’s real estate slump.
The government is betting that an export-led factory boom can compensate, even though there are mounting geopolitical threats to that strategy. Western countries accuse China of building excess capacity in its industries and dumping cheap products abroad, and warn they may erect new trade barriers. A surprise decline in Chinese industrial profits last month also underscored the risks.
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