China's Caixin PMI Slips in April as Pockets of Weakness Remain

A private gauge of Chinese manufacturing slipped in April, underscoring pockets of weakness in an economy weighed by overcapacity and weak external demand.

The manufacturing purchasing managers index from Caixin Media and Markit Economics fell to 49.4, missing economists’ estimates for 49.8 and down from 49.7 in March. Readings below 50 signal deteriorating conditions.

The non-official gauge follows the Sunday release of the government’s broader measure, which showed conditions stabilized in April after a sharp rebound in March. The mixed readings highlight the challenge for policymakers balancing the need for ongoing stimulus to keep the economy humming, while seeking to avoid propping up zombie companies in industries with excess capacity.

"The muted pass through from stimulus to the real economy reflects a combination of lackluster demand abroad, and high debt and overcapacity at home," Bloomberg Intelligence economists Tom Orlik and Fielding Chen wrote in a note. "Both make corporates reluctant to add workers or engage in capital spending."

— With assistance by Xiaoqing Pi

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