China’s manufacturing sector saw worst month in year

24 Apr 2015


China's manufacturing sector saw its worst month in a year, even as the revival from quantitative easing in the EU slowed down.

Stock markets across Europe and most of Asia retreated on Thursday after new survey data revealed that Eurozone's recovery was faltering and China's manufacturing sector was at its weakest in a year.

The preliminary HSBC China Manufacturing Purchasing Managers Index, a gauge of nationwide manufacturing activity, declined to one-year low of 49.2 in April, as against a final reading of 49.6 in March, HSBC Holdings PLC said Thursday.

"Operating conditions in China's manufacturing sector deteriorated slightly for the second month running in April," HSBC economist Qu Hongbin said in a statement.

In addition to weak demand, stronger deflationary pressures persisted in the manufacturing sector, with both input and output prices falling at faster rates.

According to Qu, manufacturers also reported job shedding for the 18th straight month.

However, improved new export orders in April were a bright spot.

The preliminary PMI figure, or the HSBC Flash China PMI, is based on 85 per cent to 90 per cent of total responses to HSBC's PMI survey each month, and is issued about a week ahead of the final PMI reading.

Though production logged a small gain, the key manufacturing sector continued to lose jobs, even as prices declined even more steeply than in earlier months, suggesting that action by the authorities to stem the trend of deflation was yet to filter to the real economy.

Export orders were marginally up even as business from domestic companies slid further.

Meanwhile, Asian stocks were mostly up on  Thursday, with Tokyo and Seoul bourses seeing  multi-year highs.

The lacklustre manufacturing data sparked volatility in Chinese markets; the Shanghai Composite was up 0.4 per cent at close after alternating between gains and losses, while Hong Kong's Hang Seng index last traded in the neutral territory after vaulting as much as 280 points in the morning session.

Equity markets in the world's second-biggest economy were up 80 per cent over the past six months, even as the country's economy slowed to a six-year low of 7 per cent growth in the first quarter. According to a commentary in the state controlled, People's Daily newspaper, China's bull market "has just begun" and the increase in share prices "has support from China's grand development strategy and economic reforms."

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