HSBC China Flash manufacturing PMI climbed to a two-month high of 48.3 in April.
This was in line with expectations and above a reading of 48 in March.
But a reading below 50 shows that China’s manufacturing sector is still in contraction.
“Domestic demand showed mild improvement and deflationary pressures eased, but downside risks to growth are still evident as both new export orders and employment contracted,” said Hongbin Qu, HSBC chief economist for China, in a press release.
“The State Council released new measures to support growth and employment after the release of Q1 GDP. Whilst initial impact will likely be limited, they signaled readiness to do more if necessary. We think more measures may be unveiled in the coming months and the PBoC will keep sufficient liquidity.”
Here are all the ugly details of the PMI report:
Here’s a look at the trajectory of HSBC manufacturing PMI:
The employment sub-index is one to watch. Ahead of the release Bloomberg BRIEF economist Tom Orlik tweeted this chart that shows “each drop in output triggers greater fall in factory employment.”
Chinese GDP climbed 7.4% in the first quarter, confirming the economic slowdown economist and investors have been talking about.
Policymakers have set a growth target of 7.5% for 2014, and economists expect they have a floor of 7% GDP growth for the year. A disappointing flash PMI number will only add to concerns about a possible hard landing.
The flash reading is based on 85% — 90% of total PMI survey responses each month.
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