HONG KONG – Factory activity in China shrank for the fourth straight month in April, though the decline was slightly slower, a survey on Wednesday said, in a possible sign the slowdown in the world’s No. 2 economy is stabilizing.
The preliminary version of HSBC’s purchasing managers’ index edged up 48.3 from March’s 48.0 on a 100-point scale on which numbers above 50 indicate expansion.
The report said output and new orders decreased at a slower rate. However, new orders for customers in export markets overseas shrank after expanding the previous month.
The report comes after China last week said economic growth slowed further in the first quarter, though it still looked robust enough to satisfy authorities in Beijing who are trying to guide the economy to more sustainable growth without politically dangerous job losses. The 7.4 per cent expansion in the January-March period was down from the previous quarter’s 7.7 per cent and matched a mini-slump in late 2012 for the slowest growth since the 2008-09 global crisis.
Beijing has ruled out sweeping stimulus to help jumpstart growth, but leaders have introduced small-scale measures to boost certain sectors, such as tax cuts for small businesses and speeding up construction of railways and public housing.
“China’s economy is still likely to slow further this quarter but the slowdown appears to be moderating, helped in part by the government’s move to support growth with spending on railways and social housing,” said Julian Evans-Pritchard, China economist at Capital Economics in Singapore.
Qu Hongbin, HSBC’s chief China economist, said that while the initial impact of the most recent mini-stimulus will likely be limited, leaders have “signalled readiness to do more if necessary” and further measures may be unveiled in the coming months.
The PMI is based on 85-90 per cent of responses from about 420 factories. The final version will be released May 5.