The HSBC China Purchasing Managers’ Index™ shows China Manufacturing PMI Contracts 4th Month.

Key Points

  • Output and new orders contract at slower rates
  • Staff numbers are cut for the sixth month in a row
  • Solid reduction in both input and output prices

Chinese manufacturers signalled a further deterioration in overall operating conditions during April. Both output and total new work declined over the month, albeit at weaker rates than those recorded in March. Fewer new orders led firms to cut their staffing levels at a modest pace, while purchasing activity fell for the third successive month. Meanwhile, both input costs and output charges fell markedly.

After adjusting for seasonal factors, the HSBC Purchasing Managers’ Index™ (PMI™) – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – posted at 48.1 in April, down fractionally from the earlier flash reading of 48.3, and up from 48.0 in March.

This signalled the fourth successive monthly deterioration in the health of the sector. Production at Chinese manufacturers fell for the third consecutive month in April, though at a weaker pace than in March.

Weaker client demand was attributed by a number of survey respondents to deteriorating market conditions. Goods producers in China cut their staffing levels for the sixth month running in April, amid reports of company down-sizing policies which stemmed from lower production requirements. Moreover, the rate of job shedding accelerated from the previous month. Despite reduced workforce numbers, volumes of unfinished work fell for the third successive month in April. That said, the rate of backlog depletion was marginal.

China Manufacturing PMI 2004-Present

Note that China manufacturing has spent more time in contraction than expansion since Mid-2011. Those expecting China to lead a surge in global growth are mistaken.

Mike “Mish” Shedlock