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HSBC Flash April PMI Rebounds, Still in Contractionary Range

04-23 16:01 Caijing
The flash Purchasing Managers Index rose 49.1 in April from March’s final reading of 48.3, still in the contractionary range.

A preliminary reading of China’s manufacturing activities rebounded slightly in April, indicating an upward trend in the world’s second-largest economy following a dip in the first quarter.

The flash Purchasing Managers Index rose 49.1 in April from March’s final reading of 48.3, still in the contractionary range. A reading above 50.0 indicates expansion while a reading below 50 indicates contraction.

With more easing policies expected on the way, the reading of HSBC’s PMI is expected to tick up in the coming months, HSBC said.

The new order sub-index grew from 47.4 to 48.9, and some other sub-indices including output, new export and new jobs also climbed disproportionately, according to a statement released jointly by HSBC and Markit.

March’s credit burst and the steady improvement in the periphery economies have pushed up HSBC’s preliminary reading, Everbright Securities’ macro analyst Zhong Zhengsheng said in a written interview.

In addition, Guo Lei, a researcher with Zheshang Securities, attributed March’s PMI rise to the expansion in fixed investments. Sales of some important capital goods such as crude steel, excavators and bulldozers rebounded dramatically, have reflected rising fixed investment, Guo said.

“As April flash ticked higher, this suggests that the earlier easing measures have started to work and hence should ease concerns of a sharp growth slowdown,” HSBC Chief Economist for China Qu Hongbin said in a statement Monday.

With the pace of output and demand growth both remains historically low, the job market will also take the strain, which calls for additional easing measures in the coming month, Qu said, adding that HSBC expects the introduction of monetary and fiscal easing measures to speed up in the second quarter.

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