Manufacturing Holds Ground on Overseas Orders (Image Credits: Unsplash)
Beijing – China’s official manufacturing purchasing managers’ index dipped marginally to 50.3 in April from 50.4 the previous month, signaling continued but fragile expansion in factory activity. The private sector gauge climbed higher to 52.2, reflecting stronger performance among export-focused firms. Yet the non-manufacturing PMI fell to 49.4, matching a 40-month low and pointing to persistent softness in services and construction, areas more tied to domestic consumption.[1][2]
Manufacturing Holds Ground on Overseas Orders
Factory production edged up to 51.5 in April, a slight improvement that kept output above the key 50 expansion threshold. Employment remained in contraction territory at 48.8, though it showed a modest gain from prior readings. New orders cooled to 50.6 after stronger March figures, hinting at cooling domestic momentum.[2]
The divergence appeared clearest in external metrics. New export orders rose to 50.3, marking expansion for the first time since April 2024 and underscoring resilient overseas demand. Imports also crossed into positive territory at 50.1. This external buoyancy contrasted with softer internal orders, a pattern echoed in the stronger RatingDog PMI reading.[1]
Services Sector Slumps to Multi-Year Low
The non-manufacturing PMI’s drop to 49.4 reflected broad weakness, particularly in new orders at 44.3 – the lowest level since 2022. Export orders in this sector stayed subdued at 47.3, contracting for a 16th straight month. Business expectations offered some optimism, ticking up to 54.7.[2]
Services, which lean heavily on domestic spending, have underperformed manufacturing in recent months. Input prices held above 50 for a sixth consecutive month at 51.7, while sales prices continued contracting at 48.1 for the 31st month. These trends reinforced concerns over subdued household and business demand at home.[1]
Private vs. Official Gauges: A Tale of Two Economies
The gap between official and private surveys highlighted structural divides. The NBS index, which covers larger state-influenced firms, barely stayed in expansion, while the RatingDog PMI – sampling smaller, export-oriented private manufacturers – accelerated to 52.2 from 50.8.
| Indicator | NBS (Official) | RatingDog (Private) |
|---|---|---|
| April PMI | 50.3 | 52.2 |
| Change from March | -0.1 | +1.4 |
| Focus | Mixed, incl. state firms | Export-oriented private |
This outperformance in the private gauge suggested external markets continued to outpace domestic ones.[2]
Price Pressures Persist Amid Reflation Signals
Inflationary tendencies endured across sectors. In manufacturing, the raw materials purchase price index stood at 63.7, while ex-factory prices reached 55.1 – both elevated but slightly off March peaks. Non-manufacturing input costs remained firm, supporting views of ongoing reflation.
“China’s purchasing managers’ index fared better than expected as new export orders and imports returned to expansion for the first time since early 2024,” analysts at ING observed. “But softer domestic activity sent the non-manufacturing PMI back into contraction. Price pressures also stayed firmly in expansionary territory, suggesting China’s reflation is continuing.”[2]
What Lies Ahead for China’s Recovery
April’s data painted a mixed picture: manufacturing propped up by trade flows, services dragging under domestic lethargy. Policymakers face the challenge of bolstering internal consumption without derailing export gains. Elevated prices offered some reassurance on reflation, yet weak orders in services underscored the need for targeted support.
While external demand provides a buffer, sustained growth will hinge on reviving household spending and business investment. Observers will watch upcoming policy moves closely, as the services sector’s slump signals vulnerabilities that exports alone cannot fully offset.
