BEIJING- China’s factory activity growth slowed and missed forecasts in April as supply bottlenecks and rising costs weighed on production and overseas demand lost momentum.
The country’s official manufacturing purchasing managers’ index (PMI) fell to 51.1 in April from 51.9 in March, data from the national Bureau of Statistics (NBS) showed.
It remained above the 50-point mark that separates growth from contraction on a monthly basis but was below the 51.7 expected in a Reuters poll of analysts.
“Some surveyed companies report that problems such as chip shortages, problems in international logistics, a shortage of containers, and rising freight rates are still severe,” NBS statistician Zhao Qinghe said in a statement accompanying the official PMI.
That contrasted with a private-sector survey, also released on Friday, which showed factory activity in April expanded at the fastest pace in four months although businesses in that release also reported a sharp surge in input costs.
“With the economy already above its pre-virus trend and the policy stance less supportive, growth momentum will wane this year,” analysts from Capital Economics said in a note on the PMI.
China’s economic recovery quickened sharply in the first quarter of the year with record growth of 18.3 percent, shaking off the hit from last year’s COVID-19-induced slump.
Analysts now expect the world’s second-largest economy to grow 8.6 percent in 2021.
The robust economic recovery has outpaced rebounds seen in manufacturing competitors such as India, which are still struggling to contain new waves of coronavirus outbreaks.
Policymakers in Beijing have signaled they are keen to avoid sudden policy changes that could derail the recovery.
“We expect that an export demand recovery will help factory orders and that the May holiday will help the services sector,” said Iris Pang, chief economist for Greater China at ING, in a note, referring to China’s labor day vacation due to start on Saturday.
Overseas demand should also pick up as COVID-19 is brought under control in major markets like the United States and Europe, she said, but chip shortages could continue for several quarters and push up prices of electronic goods. – Reuters
