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A private gauge of China’s factory activity fell into contractionary territory in April, pointing in the same direction as an official index and reflecting weakening market demand.
The China Caixin manufacturing purchasing managers index fell to 49.5 in April from 50.0 in March, according to data released Thursday by Caixin Media Co. and S&P Global.
It was the first time in three months the index fell below the 50 mark separating expansion in activity from contraction.
“This suggests that China’s economic recovery significantly slowed after Covid-19 infections peaked at the start of this year,” said Wang Zhe, an economist at Caixin Insight Group.
Weak domestic demand was the main drag, weighing on total new orders that fell back into contraction in April, Caixin said. The subindex for new export orders remained stable as more pandemic-related restrictions were lifted.
The manufacturing output subindex, which stayed above the 50 mark, slowed for the second straight month in April, Caixin said.
Muted demand led companies to cut their staffing again in April, which Caixin said was the quickest pace in three months.
China’s official manufacturing PMI, a competing gauge, dropped to 49.2 in April from the previous month’s 51.9 reading.
The decline in both indexes came after China reported stronger-than-expected economic growth in the first quarter, driven by consumer spending. High-frequency data tracking spending during a five-day holiday around May 1 showed that China’s consumption seemed to power ahead, underlining the uneven recovery in the world’s second-largest economy.
