China's manufacturing Purchasing Managers' Index drops

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IANS | 02 May, 2013
China's Purchasing Managers' Index (PMI) for the manufacturing sector fell to 50.6 percent in April from 50.9 percent in March, the China Federation of Logistics and Purchasing (CFLP) said Wednesday.

It was the seventh consecutive month in which the PMI figure stayed above 50 percent, which demarcates expansion from contraction, according to a statement from the CFLP.

Although the PMI remains generally stable, the slight retreat indicates slower growth in the manufacturing sector and the need for a stronger momentum in China's economic growth, reported Xinhua citing the statement.

The April PMI showed that the foundation for China's economic recovery is not solid enough, said Zhang Liqun, an analyst from the Development Research Center of the State Council, or China's cabinet.

The decline in orders caused the fall in the inventory level, and a sharp drop in the sub-index for purchasing prices of raw materials suggests the corporate confidence was undermined, Zhang said.

According to the CFLP, orders received by manufacturers dropped in April, as the sub-index for new orders edged down 0.6 percentage points from the previous month to 51.7 percent.

The sub-index for purchasing prices of raw materials tumbled 10.5 percentage points to 40.1 percent, the first reading below 50 after the sub-index stayed above the demarcation level for seven consecutive months.

The sub-index for finished goods inventories moved down 2.5 percentage points from the previous month to 47.7 percent, while the sub-index for production shrank slightly by 0.1 percentage points to 52.6 percent.

The sub-index for raw materials inventories remained unchanged at 47.5 percent in April, said the CFLP.