Caixin China Manufacturing PMI picks up to 4 Month High in April
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Caixin China Manufacturing PMI picks up to 4 Month High in April

Latest survey data indicated that growth momentum picked up across China's manufacturing sector in April, with firms reporting the strongest increases in

Latest survey data indicated that growth momentum picked up across China's manufacturing sector in April, with firms reporting the strongest increases in output and sales for four months. This supported renewed expansions in employment and purchasing activity. However, the time taken for inputs to be delivered continued to lengthen amid reports of material shortages and logistical delays. Prices data meanwhile showed that higher raw material costs led to a steeper increase in input prices, which were generally passed on to clients in the form of higher charges. The headline seasonally adjusted Purchasing Managers' Index , a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy, rose from an 11-month low of 50.6 in March to 51.9 in April. This signalled the strongest improvement in the health of the sector since December 2020, albeit one that was modest overall.

Key findings

  1. Stronger increases in output and new orders

  2. Employment returns to growth

  3. Companies signal further marked rise in input costs

Total new orders rose for the eleventh month running in April, with manufacturers widely commenting on improved market conditions and greater customer demand. Though mild, the rate of growth was the strongest in 2021 to date, and supported by a further upturn in export sales.

Greater inflows of new work led goods producers in China to expand production volumes again in April, with the rate of expansion also improving to a four-month high.

The sustained increase in sales also led to a further accumulation in backlogs of work, with the rate of growth picking up since March. Consequently, manufacturers added to their staff numbers for the first time in five months.

Though only marginal, the rate of job creation was the second-fastest seen in over eight years

Goods producers in China also upped their purchasing activity in order to support higher production volumes. Though moderate, the rate of expansion was the steepest seen since December 2020. On the inventories front, stocks of inputs were broadly stable, white inventories of finished items fell modestly.

The time taken for purchased inputs to be delivered continued to lengthen in April, and to a greater extent than in March. Firms frequently mentioned that raw material shortages and logistical delays had driven the latest decline in vendor performance.

Prices data showed a further rapid increase in input costs amid reports of supplier price hikes (with metals and chemicals mentioned in particular). Notably, the latest increase in expenses was the quickest since November 2017. As part of efforts to alleviate pressure on margins, companies often passed on higher costs to customers through higher factory gate charges, which rose sharply overall.

Output expectations remained markedly upbeat in April, despite the level of positive sentiment edging down to a three-month low. Hopes of an end to the COVID-19 pandemic and the release of pent up demand, alongside new product releases, reportedly drove confidence.

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