China's Manufacturing PMI Expected to Slow in April 2024

China's manufacturing activity is expected to grow more slowly in April 2024. The official purchasing managers' index (PMI) is likely to slip to 50.3 in April from 50.8 in March, while the private Caixin factory survey is also expected to show the manufacturing PMI slowing to 51.0 from 51.1 in March. The 50-point mark separates growth from contraction.

Analysts attribute the anticipated slowdown to factors such as residual seasonality in the NBS manufacturing PMI and subdued growth in steel demand in April. Despite China's economy growing faster than expected in the first quarter, domestic demand remains frail, and the property downturn continues to impact local governments' finances and household confidence.

Why this matters: The manufacturing PMI is a key indicator of the health of China's manufacturing sector, which is a crucial driver of the country's economic growth. A slowdown in manufacturing activity could have broader implications for China's economic recovery and global trade dynamics.

Investors are closely watching for the April Politburo meeting, where economic matters are expected to be a focus. Policymakers may need to launch more stimulus measures to support the economy amid rising trade tensions and tepid external demand. "We expect the Chinese authorities to launch more stimulus to support the economy," said a senior economist at a leading research firm.

The official manufacturing PMI and Caixin Manufacturing PMI for April 2024 will be published on Tuesday. Economists and market participants will be closely monitoring these figures to gauge the strength of China's manufacturing sector and its potential impact on the broader economy.

Key Takeaways

• China's manufacturing activity expected to grow more slowly in April 2024.
• Official PMI likely to slip to 50.3 from 50.8, Caixin PMI to 51.0 from 51.1.
• Slowdown attributed to seasonality, subdued steel demand, and weak domestic demand.
• Investors watching for April Politburo meeting, where more stimulus may be launched.
• Official and Caixin PMI data for April 2024 to be published on Tuesday.