BEIJING — Growth in the mainland Chinese manufacturing sector unexpectedly slowed in April as new export orders fell, data released Wednesday showed, raising fresh doubts about the strength of the economy after a disappointing first quarter.
The official purchasing managers’ index fell to 50.6 in April from an 11-month high in March of 50.9. A reading above 50 indicates expansion; below indicates contraction. Analysts had expected the April reading to be 51.
The reading mirrored a similar decline in a preliminary P.M.I. report last week by the British bank HSBC, suggesting that China’s export engine faces obstacles resulting from the euro zone recession and sluggish U.S. growth.
China’s new leadership has signaled it will step up infrastructure investment, which analysts said would provide support for the economy in the second quarter.
“Over all, my general feel is that China is growing, but slower than people expected, say, a month ago,” said Alvin Pontoh, economist at TD Securities in Singapore.
“But I don’t think this is reason for alarm,” he added. “This is probably what the new administration is looking for. Structurally, China cannot grow at 9 or 10 percent any more, so over the next few years, you’d reasonably expect growth to edge lower — to, say, 7 percent or so.”
Global data, including lower-than-expected U.S. economic growth figures, have dented the optimism at the start of the year that the world economy was picking up.
Market reaction to the P.M.I. was muted, as many countries in Asia and Europe were marking the Labor Day holiday. Chinese markets were closed and were scheduled to reopen Thursday.
The official P.M.I. figures showed that a subindex of new orders had fallen to 51.7 in April from 52.3 in March, holding above 50. However, the index of new export orders fell to 48.6 from 50.9 in March, suggesting the orders were shrinking.
The input price subindex fell to 40.1 in April, its lowest in at least four years.
“The dip in April P.M.I. shows that the foundation for China’s economic recovery is still not solid,” Zhang Liqun, an economist at the Development Research Center, a government agency in Beijing, said in an e-mailed statement accompanying the index.
“All these show the possibility for China’s growth to slow slightly in the future. We must work to stabilize domestic demand and make our economic recovery more sustainable,” he said.
HSBC’s preliminary P.M.I. for April fell to 50.5, from 51.6 in March, as new export orders shrank. The final reading is scheduled to be published Thursday.
The latest P.M.I. adds risks to market expectations that China’s annual economic expansion will pick up to 8 percent in the April-to-June quarter after slipping in the January-to-March period to 7.7 percent, from 7.9 percent in the previous quarter.
Zhiwei Zhang, a China economist at the Japanese bank Nomura, said in a client note before the release of the P.M.I. figures that he expected growth to ease again in the second quarter, to 7.5 percent.
Apart from expectations of more infrastructure investment, the central bank is expected to hold rates steady throughout 2013, as it needs to tread a delicate balance between inflation and growth, a Reuters poll showed.
“We still expect major activity indicators to show a moderate growth recovery in April” and in the second quarter, Ting Lu, a China economist in Hong Kong for Bank of America Merrill Lynch, said in a note to clients. “On policies, we expect overall monetary and fiscal policies to remain accommodative, though we see no need for significant stimulus.”
Beijing is aiming for economic growth of 7.5 percent in 2013, lower than the double-digit levels in most years in the past three decades, as it tries to shift the economy to reduce reliance on exports and more towards consumption.
Article source: http://www.nytimes.com/2013/05/02/business/global/02iht-chinapmi02.html?partner=rss&emc=rss