China factory activity cooled in April as recovery challenges loom

BEIJING—China’s manufacturing activity contracted in April, official figures showed Sunday, due to tapering global demand and slow domestic recovery after Covid-related curbs were lifted.

The official manufacturing purchasing managers’ index—a key gauge of Chinese factory output –fell unexpectedly to 49.2 in April from 51.9 in March, and below the 50-point mark that separates expansion and contraction in activity, data from the National Bureau of Statistics showed.

Analysts polled by Bloomberg News had expected April factory activity of 51.4. The drop comes after February recorded the highest reading in more than a decade as factories returned to normal following a surge in Covid cases.

China’s economy grew 4.5 percent in the first three months of the year as the country reopened after dropping strict health controls that helped keep the coronavirus in check but battered businesses and supply chains.

But the world’s second-largest economy is also beset by a series of other crises, from a debt-laden property sector to flagging consumer confidence, global inflation, the threat of recession elsewhere and geopolitical tensions with the United States.

The official non-manufacturing PMI, which measures growth in the services and construction sectors, fell to 56.4 from 58.2 in March. The March reading was the highest since May 2011, as the country saw a surge in demand for travel, entertainment and other leisure services unavailable for nearly three years during the pandemic.

The government has set a comparatively modest growth target of around five percent this year, a goal Premier Li Qiang has warned could be hard to achieve.