Comes in worse than the flash reading …

  • Both output and total new work declined over the month, albeit at weaker rates than those recorded in March.
  • Fewer new orders led firms to cut their staffing levels at a modest pace
  • Purchasing activity fell for the third successive month
  • Both input costs and output charges fell markedly
  • Production at Chinese manufacturers fell for the third consecutive month in April, though at a weaker pace than in March
  • Panellists generally attributed the latest reduction of output to fewer new orders, which decreased at a marked rate in April
  • Data suggested that sluggish domestic demand predominantly led to the fall in total new business, as new export orders declined only slightly
  • Goods producers in China cut their staffing levels for the sixth month running in April
  • Despite reduced workforce numbers, volumes of unfinished work fell for the third successive month in April.
  • The rate of backlog depletion was marginal
  • Fewer new orders led manufacturers to cut back on their purchasing activity in April. However, the pace of reduction was only slight, having eased from that seen in March.
HSBC manufacturing PMI 05 May 2014

Capital Economics China economist Julian Evans-Pritchard:

  • The breakdown was weaker than the flash release across the board.
  • In particular, the improvement in new orders was smaller, though it remains the primary reason for the increase in the headline number.
  • Output and employment were also weaker than the flash had suggested.
  • Today’s lower than expected reading is a sign that conditions in the manufacturing sector remain challenging.
  • Nonetheless, it is the first improvement in the index since October, which alongside the second successive pick-up in the official manufacturing PMI announced last week, suggests that downward pressure on the economy has eased somewhat.
  • Looking ahead, official measures to speed up spending on railways and public housing should boost infrastructure investment, helping to support the manufacturing sector. That said, we still expect economic growth to weaken further over the medium term as private property construction slows.

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Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said:

“The final reading of the HSBC China Manufacturing PMI stabilised at 48.1 in April, up slightly from 48.0 in March, and revised down from an earlier flash reading of 48.3. The latest data implied that domestic demand contracted at a slower pace, but remained sluggish. Meanwhile, both the new export orders and employment sub-indices contracted, and were revised down from the earlier flash readings. These indicate that the manufacturing sector, and the broader economy as a whole, continues to lose momentum. Over the past few days, Beijing has introduced more reform measures which could support growth by inducing more private sector investment. We think bolder actions will be required to ensure the economy regains its momentum.”

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AUD a little lower on the data – but initial buying orders seen at 0.9250