A monthly purchasing managers index, published by business magazine Caixin, rose on a 100-point scale from the 11-month low in March of 50.6 on a 100-point scale, where numbers above 100 indicate increasing activity, to 51.9 .
A separate poll released by China’s statistics bureau and an industry group fell 0.8 points to 51.1 but was still above the 50 point mark and showed that activity was picking up. A production sub-index fell by 1.7 points to 52.2.
This suggests that “growth momentum will wear off this year,” Capital Economics’ Julians Evans-Pritchard said in a report. Chinese manufacturing and consumer spending have rebounded from pre-pandemic levels, but the recovery is slowing. Economic growth in the first three months of 2021 slowed compared to the previous quarter to 0.6%.
The sub-index for new export orders in the April survey by the statistics office and the Chinese Association for Logistics and Purchasing fell by 0.8 points to 50.4. This could “reflect a delayed response to the COVID recovery in the US and Europe,” ING’s Iris Pang said in a report. “We should see some improvement in export orders as COVID continues to decline in these important export markets.”
Chinese manufacturers benefited from the relatively early reopening of the economy in 2020, while exporters benefited from global demand for masks and other medical supplies. Exporters have gained global market share while foreign competitors continue to face disease barriers.
“The main remaining pillar is the export sector, but demand for Chinese consumer goods is likely to decline in the coming quarters as the introduction of vaccines can return global consumption patterns to normal,” said Evans-Pritchard.
Some Chinese manufacturers like telecommunications equipment giant Huawei Technologies Ltd. are also hampered by US restrictions on access to processor chips and other technologies.