BEIJING (Reuters) – China’s manufacturing activity in April likely expanded at a slower pace, a Reuters poll showed on Monday, indicating the country’s sprawling factory sector may have lost some momentum at the start of the second quarter.
The official purchasing managers’ index (PMI) likely slipped to 50.3 in April from 50.8 in March, according to the median forecast of 33 economists in the poll. The 50-point mark separates growth from contraction.
The data will be released by the National Bureau of Statistics (NBS) on Tuesday.
The world’s second-biggest economy grew faster than expected in the first quarter, offering some relief to officials, but March indicators showed domestic demand remains frail. The property downturn continues to hurt local governments’ finance and household confidence, analysts said.
High frequency indicators such as steel demand showed muted growth in April, according to analysts at Goldman Sachs.
“Residual seasonality in NBS manufacturing PMI also poses some downward pressure on the April reading. In historical years with similar calendar patterns to this year, both the NBS and Caixin manufacturing PMI tended to decrease in April.”
The private Caixin factory survey, which will also be issued on Tuesday, is expected to show the manufacturing PMI in April slowed to 51.0 from 51.1 in March, according to the median forecast of 17 economists polled by Reuters.
Investors expect the Chinese authorities to launch more stimulus to support the economy and are waiting for the April Politburo meeting, which is expected to focus on economic affairs and be held by the end of April.
Analysts said policymakers are in no hurry to roll out more easing measures as the 5.3% year-on-year real GDP growth in the first quarter surpassed the “around 5%” growth target for this year.
However, with the U.S. Federal Reserve and other developed economies not rushing to cut interest rates and rising trade tensions between the West and China, Beijing may face a longer period of tepid external demand and have to deal with multiple geopolitical challenges weighing on its economic recovery.
(Polling by Devayani Sathyan and Anant Chandak in Bengaluru and Jing Wang in Shanghai; Reporting by Ellen Zhang and Ryan Woo; Editing by Jacqueline Wong)
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