BEIJING, April 30 (Reuters) – China’s factory activity expanded for a second straight month in April on firmer output and stockpiling activity, an official survey showed on Thursday, suggesting that growth momentum held despite external shocks stemming from the Middle East war.
The official manufacturing purchasing managers’ index (PMI) dipped to 50.3 from 50.4 in March, but kept above the 50-mark separating growth from contraction, according to a survey by the National Bureau of Statistics (NBS). It beat a median forecast of 50.1 in a Reuters poll.
The PMI survey’s sub-index for production expanded at a slightly faster pace but that for new orders slowed to 50.6 from 51.6 in March. The sub-index for raw material stockpiles rose but remained in contraction.
The expansion in factory activity, which follows better-than-expected first-quarter growth, highlighted the Chinese economy’s resilience in the face of soaring energy costs and disruptions to raw material supplies stemming from the U.S.-Israeli war on Iran.
But a prolonged conflict will likely weigh on the global economy and squeeze external demand, which has been vital in supporting China’s growth as domestic consumption remains subdued.
Momentum was solid in the first quarter, with China’s GDP growth hitting 5% year-on-year – the top of the government’s full-year target range, lessening the need for immediate stimulus.
But unemployment rates edged higher and retail sales – a gauge of consumption – continued to underperform industrial output. Growth in goods exports slowed in March, although that was partly due to a high base last year.
Producer prices ended a years-long deflationary streak in March, but that was partly due to rises in global oil prices and could squeeze the profit margins of businesses in the petrochemical sector.
China’s top leaders vowed earlier this week to enhance energy and resource security and “systematically respond to external shocks and challenges.”
The non-manufacturing PMI, which includes services and construction, dropped to 49.4 from 50.1 in March, NBS data showed.
The RatingDog China General Manufacturing PMI, a private survey compiled by S&P Global, came in at 52.2 in April compared with 50.8 in March.
The NBS focuses more on state-owned and large and medium-sized, domestic-facing enterprises, while the private poll is more sensitive to external demand, profiling producers around Shanghai and in China’s southwestern provinces, analysts say.
(Reporting by Yukun Zhang and Joe Cash; Editing by Jacqueline Wong)
