PMI edges up to 51.1 in April

Manufacturing improves for 11th consecutive month, driven by stronger output

China's manufacturing sector showed a further marginal improvement in operating conditions last month, driven by accelerated output, although weaker demand in international markets stagnated exports, according to an unofficial leading economic indicator released on Wednesday.

The manufacturing Purchasing Managers' Index (PMI), jointly issued by Caixin Insight Group and global marketing information company IHS Markit, edged up to 51.1 in April from 51.0 in March, marking the 11th consecutive month of the strengthening of operating conditions, although the rate of improvement was modest.

The official manufacturing PMI, released by the National Bureau of Statistics two days earlier, slightly weakened by 0.1 percentage points to 51.4 in April, but stronger than market expectations, mainly led by the dips of new orders and the trade-related sub-indices.

Both gauges remained above 50－the threshold between expansion and contraction, indicating that the manufacturing sector maintained stable growth momentum, said analysts.

Output increased at a faster rate last month than in March, while the contraction in employment narrowed. However, growth of new business moderated for the second straight month, reflecting weakening demand across the manufacturing sector, said a Caixin/Markit research note.

"Overall, operating conditions across China's manufacturing sector continued to improve in April. But uncertainty in exports has increased significantly, and the dependence of the Chinese economy on domestic demand is rising," said Zhong Zhengsheng, director of Macroeconomic Analysis at CEBM Group.

Data from the Caixin/Markit PMI survey showed that April's new export sales declined for the first time since November 2016, due to weaker demand in international markets that had partly weighed on overall growth.

Concerning future market conditions and the strength of global demand, some manufacturers expressed weakened confidence toward the year ahead, reflected by a Caixin/Markit PMI sub-index that dipped to a four-month low last month.

Zhao Qinghe, an economist with the NBS, said that as the nation's manufacturing sector maintains stable growth, especially among high-quality and high-tech companies, the profitability of manufacturers improved during the past month.

"Besides, the non-manufacturing sector also showed fast expansion which contributed more to the overall economic growth," said Zhao.

According to the NBS, the country's non-manufacturing sector expanded at a faster pace for a second consecutive month in April, rising from 54.6 in March to 54.8. The pace of expansion was also higher than 54 in April 2017.

Some economists predicted a gradual slowdown of Chinese economic growth throughout 2018, although the 6.8 percent year-on-year GDP growth was unchanged in the first quarter compared with that in the last three months in 2017, with investment growth in manufacturing and infrastructure both moderating.