Chinese manufacturing growth slowed down in April from an almost five-year high recorded in March.
The manufacturing purchasing managers index (PMI) dropped from 51.8 in March to 51.2 in April, missing economists’ expectations for a slight decrease to 51.7.
Whilst any reading above 50 indicates growth, the sharp decline suggests that economic growth may have already peaked this year.
“As policymakers shift their emphasis to address financial risks, it will inevitably have an impact on liquidity, financing costs and growth expectations,” Zhang Yiping, a researcher at China Merchants Securities, was quoted by Xinhua as saying.
According to a statement by the National Bureau of Statistics (NBS), manufacturing was affected by weaker market demand, slower export growth, and a decline in commodity prices.
Economists expect a slowdown to occur
“The still-high output and new orders sub-indices suggest growth momentum likely remained resilient in April, albeit slower than in a strong March,” Zhao Yang of Nomura was quoted as saying by the BBC.
“Looking ahead, we see downside pressures looming and maintain our call for a shallow slowdown through the course of this year.”
According to Bloomberg, Zhou Hao, an economist at Commerzbank AG in Singapore, wrote in a note that the “weakness is across the board”.
“This on one hand reflects that there’s little improvement in underlying demand; on the other hand, the deleveraging effort by the Chinese authorities has started to work. In general, China is in the course of monetary tightening and regulation strengthening,” said Hao.
