Global demand for Chinese manufactured goods just fell for the first time in more than a year

Ludmila Mitrega/Getty Images for FIVB
  • The Caixin-IHS Markit China Manufacturing Purchasing Managers Index (PMI) rose to 51.1 in April in seasonally adjusted terms, up from 51.0 in March.
  • Despite the headline increase, the internals of the report were weak.
  • New export orders fell for the first time in 17 months.

China’s manufacturing sector isn’t growing as fast as it was earlier in the year, weighed down by a weakening demand from abroad.

The IHS Markit China Manufacturing Purchasing Managers Index (PMI), produced in conjunction with the Caixin Insight Group, rose to 51.1 in April in seasonally adjusted terms, up from 51.0 in March.

This indicator measures perceived changes in activity levels across China’s manufacturing sector from one month to the next.

Anything above 50 signals that activity levels are improving while a reading below suggests they’re deteriorating. The distance away from 50 indicates how quickly activity levels are expanding or contracting.

So activity levels improved at a faster pace in April than March, albeit only marginally.

However, even with the modest increase, the PMI still remains below the levels seen late last year and in early 2018.

Source: IHS Markit

While the headline index improved over the month, IHS Markit said the details of the report were less impressive.

“Although output rose at a slightly quicker rate, new order growth slowed amid a renewed fall in new export work,” it said.

“Consequently, purchasing activity rose only modestly, while firms noted higher inventories of both inputs and finished items.”

Adding to signs that global demand is softening, the new export orders subindex declined for the first time in 17 months.

It also said that firms continued to shed staff, while inflationary pressures moderated sharply.

“Staffing levels continued to decline, which in turn contributed to a further increase in unfinished workloads,” it said.

“Price pressures were relatively muted, with both input costs and output charges rising at much softer rates than those seen at the turn of the year.”

Optimism towards the year ahead also weakened, falling to a four-month low.

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