BEIJING, April 30 (Reuters) – China’s manufacturing sector expanded in April at its fastest pace since the end of 2020, driven by stronger output and surging new orders, a private survey showed on Thursday.
The RatingDog China General Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 52.2 in April from 50.8 in March, survey data showed. The reading beat analysts forecast of 51.0. The 50-mark separates growth from contraction.
“Overall, the RatingDog PMI in April further confirmed that China’s economy is in the recovery stage. The structural data shows that this recovery is driven by the growth of orders and the optimistic expectations of enterprises brought about by the price effect,” said Yao Yu, founder at RatingDog.
Soaring energy and raw materials prices drove up production costs and threaten to squeeze already thin margins at factories. China’s top leadership on Tuesday pledged to strengthen the country’s energy security while pursuing rapid technological development and greater self-sufficiency.
According to the survey, production increased at the fastest pace since June 2024, with firms citing stronger demand, operational improvements and new product launches. The expansion was broad-based and strongest in the consumer goods sector.
New orders soared. New export business expanded for the fourth month running in April, the longest sequence of growth since the first half of 2024.
However, the expansion of production has not yet been transmitted to the recovery of employment. Firms turned to be cautious when adding staff, even as backlogs of work increased for a third consecutive month.
Outstanding business rose across all three sub-sectors, with investment goods producers reporting the sharpest build-up.
As the Middle East war continues, cost pressures on manufacturers intensified, with input price inflation the highest in just over four years.
Firms raised output prices at the fastest rate since October 2021, while export charges also increased at their quickest pace since October 2021.
Some exporters were able to pass the additional costs on to buyers, though others continued to face pressure on already thin margins.
Overall, manufacturers grew more optimistic about the year-ahead outlook, with sentiment improving from March and running above the average of the past two years.
China’s economy grew 5.0% in the first quarter, at the top of its full-year target range of 4.5% to 5.0%, showing higher resilience than many other countries to the Middle East conflict, due in part to ample oil reserves and a diversified energy mix.
Analysts expect no imminent plans for high-profile monetary easing measures.
“As the PBOC may continue to rely on low-profile easing measures, we have decided to push out our forecasts for both a 50bp RRR cut in Q2 and a 10bp rate cut in Q4 to next year,” Nomura said in a research note on Tuesday.
(Reporting by Ellen Zhang and Ryan Woo; Editing by Jacqueline Wong)
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