Chinese manufacturing picks up in April: HSBC
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China's manufacturing activity gained momentum in April but remains below the boom-or-bust level, according to a reading of the manufacturing purchasing manager's index (PMI) released by HSBC on Monday.
China "flash" manufacturing PMI — an early estimate of the measure, which estimates the manufacturing sector's overall health — hit a two-month high of 49.1 in April, up slightly from 48.3 in March, according to HSBC. A reading above 50 suggests expansion, while a reading below 50 indicates contraction.
"Since the April flash PMI ticked higher, this suggests that previous easing measures have started to work and should therefore ease concerns of a sharp growth slowdown," said Qu Hongbin, chief economist at HSBC China and co-head of Asian Economic Research at HSBC. "In an historical context, the pace of both output and demand growth has remained at a low level and the job market is under pressure. This calls for additional easing measures in the coming months. We expect monetary and fiscal easing to speed up in the second quarter," Qu said.
HSBC's preliminary figure for the PMI is calculated based on 85%-90% of the total responses to HSBC's monthly PMI survey, and is issued about one week before the final PMI reading. The National Bureau of Statistics and the China Federation of Logistics and Purchasing are expected to release official PMI data for April on May 1. The official data are based on a survey of purchasing managers in more than 820 companies in 20 industries.
The official results were not in line with the HSBC reading last month, suggesting different outlooks for China's manufacturing activity. The official figure beat the expectations of most analysts and jumped to 53.1 in March, 2.1 points higher than a month earlier. HSBC placed China's final March PMI at 48.3, representing a decline for five consecutive months.
Qu attributed the difference between the official and HSBC readings to different survey samples and methods of seasonal adjustment. The calculation of the official PMI index covers more than 800 enterprises, including more state-owned and large enterprises, while HSBC's poll includes around 400 small and medium firms.
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