The recovery in China’s manufacturing sector in March appears to have been short lived with a Caixin-sponsored index of activity falling back into contractionary territory in April as the coronavirus pandemic continued to hurt both domestic and international demand, reported Caixin.
The Caixin China General Manufacturing Purchasing Managers’ Index (PMI), which gives an independent snapshot of the country’s manufacturing sector, fell to 49.4 in April from 50.1 the previous month, a report released Thursday showed. A number above 50 indicates an expansion in activity, while a reading below that signals a contraction. In February, the reading fell to 40.3, the fastest contraction in the index’s 16-year history as the Chinese economy stalled amid the Covid-19 outbreak.
Although the domestic economy started to recover in March as the virus was brought under control, the rapid spread of the disease across other countries and regions disrupted international business and cratered global consumption, inflicting a further blow to Chinese companies. Although output continued to recover in April, export orders contracted for a fourth straight month and at a faster pace, with the reading at its weakest since December 2008 during the global financial crisis.
“[T]he sharp fall in export orders seriously hindered China’s economic recovery in April, although businesses were gradually getting back to work,” said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin Insight Group. The survey of around 500 manufacturing enterprises was conducted from April 7 to April 22.