Log in
Login
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 

4-Traders Homepage  >  News

News

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesHot NewsMost Read NewsRecomm.Business LeadersCalendar 
The feature you requested does not exist. However, we suggest the following feature:

China's Factory Activity Loses Some Momentum -- Update

share with twitter share with LinkedIn share with facebook
share via e-mail
0
05/01/2016 | 06:14am CEST
By Mark Magnier 

BEIJING--An official gauge of factory activity in China edged down in April, signaling a modest weakening of momentum for the world's second-largest economy despite easy-credit policies and a stronger real-estate market.

China's official manufacturing purchasing managers index, a key gauge of factory activity, fell to 50.1 in April from 50.2 in March, the National Bureau of Statistics said Sunday. This was below a median forecast of 50.4 by 12 economists polled by The Wall Street Journal. But the indicator remained above the 50 mark that signals expansion for the second straight month, after a stretch of seven months in contraction below that level. China's official nonmanufacturing PMI, also released Sunday, fell to 53.5 from 53.8 in March.

The unexpected, if modest, drop in activity suggested that government efforts to bolster growth by expanding credit are having a short-lived effect. "This really highlights the fact that the stimulus we saw in the first quarter has a limited time frame," said IG Markets analyst Angus Nicholson. "The fact that the PMI is already weakening shows the easy-credit policies are having far less efficacy in driving growth."

Credit growth rose sharply in the first quarter and Beijing frontloaded 2016 infrastructure spending in a bid to bolster momentum. The economy grew 6.7% in the first quarter, its slowest pace since 2009.

The central bank is unlikely to ease monetary policy in response to Sunday's weaker data, economists said, given that factory output continues to expand while debt levels are still rising. Corporate debt, now an estimated 160% of gross domestic product, has grown rapidly over the past half-decade partly due to increased borrowing to ward off the financial crisis.

"Beijing is unlikely to ratchet up its stimulus measures, but neither will it tighten its easing policies given the lower-than-expected PMI figures," said HSBC economist Ma Xiaoping. "The PMI data shows the Chinese economy continues its slowing trend, though it's showed signs of stabilizing."

Zhao Qinghe, an economist at the statistics bureau, said in an online comment that manufacturing activity continued to expand in April amid increased investment, an improved property market and stepped-up infrastructure spending, although he added that risks remain.

"Factory investment still declined while overall investment was recovering, which will rein in further expansion of production," Mr. Zhao said.

A subindex measuring new factory orders dropped to 51.0 from 51.4 in March, while the production subindex decreased slightly to 52.2 from 52.3 in March, the statistics agency said.

Sunday's weaker figures could hurt commodity markets, including iron ore and copper, that have pinned their hopes on a strong Chinese recovery. "China enthusiasm has been a bit overpriced," said Commerzbank economist Zhou Hao in a note.

IG Markets' Mr. Nicholson said recent stimulus measures may produce a temporary upturn, but undercut the government's pledge to deleverage and shut production in the steel, coal and related industries producing more than the market needs.

"This shows that the focus should be less about propping up growth with easy credit and more that debt-led investment is running out of steam," he said. "What they really need is to deal with debt and overcapacity."

Grace Zhu contributed to this article.

Write to Mark Magnier at mark.magnier@wsj.com

share with twitter share with LinkedIn share with facebook
share via e-mail
0
React to this article
Latest news
Date Title
06:14aDJChina's Factory Activity Loses Some Momentum -- Update
06:09a DEPARTMENT OF INDUSTRY AND SCIENCE AUSTRALIAN GO : Cleaning up Australia's waterways
06:02a SUBARU : Suburban Subaru "Shared the Love" with Fidelco Guide Dog Foundation
06:02a Midstates Petroleum Files Voluntary Chapter 11 Petitions to Facilitate Pre-Arranged Balance Sheet Restructuring
05:59a CAPITOL FEDERAL FINANCIAL : announces net income of $21.5M in quarter
05:34a DISCOVERY AIR : annouces results for the quarter and year ended January 31, 2016
05:32a ALBERTSONS : Birchwood neighborhood looks ahead as it loses Albertsons
05:07a POLICE CAMERAS ON POWER POLES : Illegal 'unblinking eyes' or smart tricks of the trade?
05:07a BAYERISCHE MOTOREN WERKE : Man, dog die in Salem crash after police chase
05:02a ALBERTSONS : El Paso's $1.3B grocery market deemed healthy
Latest news
Advertisement
Hot News 
ANDALAS ENERGY AND POWER : Issue of Zero Coupon Loan Note
6D GLOBAL TECHNOLOGIES, INC : Change in Directors or Principal Officers, Financial Statements and Exhibits (form 8-K)
AVOLON : sustains strong performance as fleet increases to over 400 aircraft
PETRO MATAD : Expecting "Highly Material" Compensation From Partner
HML : Director Dealing April 2016
Most Read News
04/30 Inbox Blueprint 2.0 – Anik Singal Launches an Easy to Follow Online Marketing Program for Beginners in Email Marketing
04/30 LIPOSUCTION VS. TUMMY TUCK : Which Is Right for Me?
04/30 ACF AUSTRALIAN CONSERVATION FOUNDATION : Coal or coral? Greens plan puts choice in focus
04/30 Derma Essence Facial Serum – Critical Information Released
04/30 Dr. Richard Balikian Now Can Treat Acne Scars With Lasers and Fillers
Most recommended articles
12:14aDJChina's Factory Activity Loses Some Momentum -- Update
04/30DJChina's Nonmanufacturing PMI Fell in April
04/30DJMARKET SNAPSHOT : Wall Street Isn't Rewarding Low-expectation Earnings Beats
04/30 China April official manufacturing activity expands at slower pace of 50.1 - PMI
04/30 Italy bank fund to own at least 92 percent of Pop Vicenza after cash call