In April, the manufacturing sector in China saw rapid growth, with new export orders increasing at the fastest pace in 3.5 years. This was driven by items such as cars, machinery, and electrical equipment. The Caixin/S&P purchasing managers index (PMI) survey indicated a significant increase in output and new orders for manufacturing enterprises, with the index rising to 51.4 points from 51.1 points in March. This exceeded analysts’ expectations and represented the fastest pace of growth since February 2023.
According to Wang Zhe, a senior economist at Caixin Insight Group, the manufacturing sector continued to improve in April, with both supply and demand expanding rapidly. Transportation and logistics systems operated smoothly, contributing to a positive outlook for the sector. The official PMI from China’s National Bureau of Statistics also showed growth, with the index at 50.4 points in April compared to 50.8 in March.
Both PMI surveys highlighted rising input costs and competition as challenges for manufacturers. Zhao Qinghe of the NBS noted that while demand for products in industries such as automobiles, machinery, and electrical equipment was strong, manufacturers were facing higher costs of raw materials like metals and crude oil. This has led to businesses reducing prices to attract orders and showing caution in hiring more workers.
Despite increased purchases and inventory levels reflecting positive sentiment among businesses, the labor market has not seen improvement. An ongoing decrease in job numbers was attributed to restructuring efforts and resignations. As input costs remain high and selling prices low, manufacturers are experiencing a squeeze on profits. Wang Zhe emphasized that while businesses are optimistic about future growth opportunities, challenges persist