Manufacturing Growth in China Slows

HONG KONG — Growth in China’s important factory sector slowed in April, a closely watched monthly index released Tuesday showed, adding to concerns that the pace of China’s overall economic growth may be faltering.

The index, which is based on a survey of purchasing managers in the manufacturing sector and released by HSBC, came in at 50.5 points for April — still above the level of 50 that separates expansion from contraction, but markedly lower than the 51.6 points recorded for March.

The release is one of the earliest measures of business activity available for the month of April and appears to indicate that an unexpected growth slowdown during the first quarter may be carrying on into the second quarter.

China’s first-quarter growth data, released by the authorities in Beijing last week, surprised analysts who had believed that the economy had picked up speed during the months of January, February and March. Instead, expansion slowed to 7.7 percent from a year earlier – down from 7.9 percent the previous quarter.

The manufacturing survey released on Tuesday reinforced the view that growth is unlikely to pick up again during the current quarter.

‘’The overall message’’ from the release ‘’is that there was some improvement in the manufacturing sector’’ around the start of the fourth quarter of 2012, but that ‘’the momentum then stalled’’ in the first quarter of this year, wrote Yao Wei, China economist at Société Générale in Hong Kong.

Investors, unnerved by the disappointing reading, sent the mainland China stock market down 2.6 percent on Tuesday. In Hong Kong, the Hang Seng fell 1.1 percent.

In part, weakening demand for exports is to blame. Orders for new exports contracted in April after a temporary rebound in March, suggesting external demand for China’s exporters remains weak, according to Qu Hongbin, a China economist at HSBC.

Weaker overall demand has also started to weigh on employment in the manufacturing sector and is likely to prompt Beijing to respond with efforts to lift domestic investment and consumption in the coming months, Mr. Qu added in a statement accompanying the index.

Article source: http://www.nytimes.com/2013/04/24/business/global/manufacturing-growth-in-china-slows.html?partner=rss&emc=rss