China PMI steadies, but doesn't dispel growth worries

Thu May 1, 2014 1:23am EDT
 
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By Kevin Yao

BEIJING (Reuters) - Activity in China's factories increased marginally in April but export orders fell sharply, a government survey showed on Thursday, adding to questions about whether the world's second-largest economy is stabilizing after its first-quarter slowdown.

The data came a day after Premier Li Keqiang pledged to step up support for the trade sector, adding to measures taken over the past month on concerns that the economy may be losing momentum more quickly than expected.

The Purchasing Managers' Index rose to 50.4 in April from March's 50.3, the National Bureau of Statistics said, one of the first indicators of how the economy started the second quarter.

At just above the 50 level that separates growth from contraction, it indicated a slight pick-up in activity for the month, although it was a notch below economists' expectations.

Zhang Liqun, an economist at the Development Research Centre, which helps compile the PMI, said the index pointed to stabilizing economic growth ahead, but others disagreed.

"We do not believe the economy has passed a turning point," said Zhiwei Zhang, China economist at Nomura.

Zhang expected annual economic growth to slow to 7.1 percent in the second quarter from an 18-month low of 7.4 percent in the first, adding the risks were to the downside.

The new orders sub-index in the PMI rose to 51.2 in April from 50.6 in March, but the sub-index for export orders fell to 49.1 last month from 50.1 in March.   Continued...

 
A shipyard is silhouetted against the rising sun in Dalian, Liaoning province, Janaury 28, 2014. REUTERS/China Daily