China’s manufacturing grew less than analysts estimated in April, highlighting weakness in the economy from exports to construction that could force extra government measures to support growth.
The Purchasing Managers’ Index (CPMINDX) was at 50.4, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing, less than the 50.5 median estimate of 38 analysts in a Bloomberg News survey. March’s reading was 50.3, with numbers above 50 signaling expansion.
Today’s data showed weakness in export orders that may make it harder for Premier Li Keqiang to avoid a deeper slowdown after property construction plunged in the first quarter and economic growth cooled. China’s gross domestic product is projected to expand 7.3 percent this year, the weakest pace since 1990, as the government reins in credit.
“We continue to expect growth to slow,” said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong. “We expect the government to loosen fiscal and monetary policies in the next few months,” he said, adding that banks’ reserve ratios may be reduced in May or June and then again in the third quarter.
Ahead of the data, Societe Generale SA analysts said that a reading of 50.4 would indicate that growth momentum remained “soft” and an economic slowdown would continue in the second quarter. Gross domestic product rose 7.4 percent in the January-to-March period from a year earlier.
China’s State Council yesterday pledged extra efforts to support trade, including through financing and export rebates, with Li saying that the situation was “severe and complicated.” In today’s data, an index of export orders fell to 49.1 from 50.1 in March.
The State Council last month outlined a package of spending on railways and housing and tax relief to support growth. The central bank also lowered the reserve-requirement ratio for some rural banks by as much as 2 percentage points.
Almost all Chinese provinces failed to meet their growth targets in the first quarter even after scaling back their ambitions as the government instructs officials to focus on reining in debt and curbing pollution.
Thirty of 31 provinces and municipalities reported missing their goals, with the biggest shortfall in northeastern Heilongjiang, where an expansion of 4.1 percent compared with an 8.5 percent target for the year. Most localities’ targets are lower than in 2013. The latest data were released by government websites and newspapers and compiled by Bloomberg News.
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