With energy prices surging and raw material supplies disrupted in the aftermath of the Iran war, China's April manufacturing purchasing managers' index (PMI) stayed in expansion for a second straight month, reaffirming the economy's resilience. However, as nonmanufacturing returned to contraction and the composite PMI also fell, the strength of the recovery is still seen as limited.
China's National Bureau of Statistics said on the 30th that the April manufacturing PMI came in at 50.3. It fell 0.1 point from the previous month but remained in expansion for two consecutive months. That beat the Reuters forecast of 50.1. A PMI above 50 indicates economic expansion; below that signals contraction.
By major industry, the PMIs for high-tech manufacturing and equipment manufacturing rose from the previous month to 52.2 and 51.8, respectively. The consumer PMI also stayed in expansion at 50.7. In contrast, the energy-intensive industry PMI came in at 47.9, extending its decline.
By corporate size, the PMI for large corporations was 50.2, above 50 for five straight months, and small and midsize corporations returned to expansion.
However, nonmanufacturing fell to 49.4, returning to contraction. By institutional sector, services recorded 49.6, down 0.6 point from the previous month, and wholesale and retail and housing services were also weak. In contrast, rail transport, postal services, telecommunications, and broadcasting each topped 55, posting relatively strong growth.
The composite PMI, which encompasses all of this, fell 0.4 point from the previous month to 50.1. Chief statistician Hu Lihui said, "Overall production in the Chinese economy remained in expansion," adding, "The expectation index for future production and operations jumped to 54.5, rising for three straight months. This shows that manufacturers remain confident about recent market conditions. In particular, the outlook is optimistic for industries such as food and beverage, automobiles, railways, shipbuilding, and aerospace."
Also released in the morning, the April Caixin manufacturing purchasing managers' index (PMI) was 52.2, rising more than 1 point from March's 50.8. It beat Reuters' forecast of 51.0 and posted the biggest gain since late 2020.
The Caixin manufacturing PMI is a private survey compiled by S&P Global and, unlike the National Bureau of Statistics survey that focuses on state-owned enterprises, large and mid-sized companies, and domestic demand, it places greater emphasis on small and midsize companies and export conditions.
Reuters said, "The expansion in April manufacturing suggests the Chinese economy is showing resilience despite soaring energy costs and raw material supply disruptions from the Iran war," but added, "A prolonged conflict would weigh on the global economy and likely dampen external demand. With domestic demand sluggish, exports have served as a key pillar of China's growth, so the impact would not be small."