Chinese manufacturing suffered its sharpest decline in one year in April, a survey showed yesterday, putting pressure on Chinese authorities to unveil new stimulus to revitalize the economy.
The HSBC Purchasing Managers' Index, an indicator of operating conditions in the industrial sector slated toward private and export-oriented companies, was at 48.9 last month, according to HSBC and research firm Markit.
It was down from 49.6 in March and was lower than the previous flash reading of 49.2, which all fell under the demarcation line of 50 that separates expansion from contraction.
The April figure pointed at deteriorating activity for the second consecutive month.
In comparison, the official PMI, compiled by the National Bureau of Statistics and the China Federation of Logistics and Purchasing, remained at 50.1 in April — flat from March — but signifying a marginal growth in activity in state-owned industrial companies.
Qu Hongbin, chief economist for China at HSBC, said the country's manufacturing sector had a weak start to the second quarter.
"Total new business of the HSBC PMI declined at the quickest rate in one year while production stagnated," Qu said. "Fewer new orders appeared to stem from weaker domestic demand, as new business from abroad showed tentative signs of improvement."
Qu said the data indicated that more stimulus measures may be required to ensure the economy doesn't slow further than it did in the first quarter.
Zhou Hao, an economist at Australia & New Zealand Banking Group Ltd, said the market discussed a possible Chinese version of quantitative easing.
"We argue that it is not an option for China now due to the impact of previous rate cuts and the fact that China still has room for further conventional monetary policy easing," Zhou said.
China's industrial production rose 6.4 percent in the January-March period, earlier data showed. Factories reported growth of 5.6 percent in March alone, down from 6.8 percent in the first two months.
China's economic growth eased to 7 percent in the first three months, the weakest quarterly expansion in six years and prompting the central bank to make surprise cuts to interest rates and bank reserve requirement ratio in the past two months.
