China HSBC Final PMI biggest drop in April, remained below the neutral 50 value at 48.9
Chinese manufacturers saw a further deterioration in April, with total new orders declining at the strongest pace for a year while production levels stagnated. Relatively weak domestic demand was the main driver of reduced new business, as new export work picked up in April. Consequently, employment in the sector continued to decline, while purchasing activity fell at the quickest rate in 13 months. Meanwhile, deflationary pressures intensified in April, with both input and output costs falling at accelerated rates.
The HSBC final Purchasing Managers’ Index (PMI)-a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy- fell to 48.9 in April, down from the 49.6 print in March. Moreover, the pace of deterioration was the strongest seen since April 2014.
The overall new orders sub-index dipped to 48 in April, the sharpest contraction in a year, although new export orders showed tentative signs of improvement. Both input and output prices declined for a ninth month in April, while manufacturing employment contracted for an 18th month.
China’s economy has been battling a weak external environment, sluggish domestic demand and a slowing property sector for a while. The economy expanded 7.4 percent last year, its slowest full-year pace since 1990 and undershooting the government’s targets for the first time since 1998.
The data strengthens the argument for more monetary stimulus, which helped to push the Shanghai Composite back into positive territory after suffering initially losses on the back of the data. Meanwhile, the Australian dollar fell as low as 0.7800 against the U.S. dollar.
Since November, the People’s Bank of China has cut interest rates twice and lowered the reserve requirement ratios of major banks two times.