China’s manufacturing activity fell more than expected in April, indicating a slowdown in the sector. This contraction in industrial output in April suggests that China’s economy may be facing challenges in achieving a balanced recovery from the pandemic.
According to Caixin and S&P Global’s statement, the Purchasing Managers’ Index (PMI) for manufacturing dropped to 49.5 in April from 50 in March, indicating the first contraction in industrial output since January. Meanwhile, China’s official manufacturing PMI fell more than expected to 49.2 in April.
Typically, a PMI above 50 suggests an expansion in the manufacturing sector, while an index below 50 indicates a contraction in the sector. The latest PMI figures suggest a sharp slowdown in China’s economic recovery. It is unclear whether the recent increase in demand will continue or if it is just a short-term effect.
China’s economy grew at its fastest pace in a year in the first quarter, mainly due to consumer spending after China lifted measures to curb the COVID-19 pandemic. However, the economic recovery has been challenging, with factories struggling to keep up with consumer demand, the real estate sector only just starting to recover, and investment continuing to decline.