China’s manufacturing activity unexpectedly contracted in April, according to official data released on Sunday. This marks a sharp slowdown from the previous month and is likely to raise pressure on policymakers seeking to boost an economy struggling for a post-Covid lift-off.
The Purchasing Managers’ Index (PMI) fell to 50.9 in April, down from 51.9 in March, indicating that factory activity had cooled off significantly compared with the previous month’s reading of expansionary growth above 50 points. The index also marked its weakest level since February 2020 when China was first hit by Covid-19-related disruptions and lockdowns were imposed across much of the country at that time.
Analysts attribute this unexpected cooling of factory activity primarily due to subdued global demand and persistent property weakness which have weighed heavily on domestic economic sentiment over recent months despite Beijing’s efforts toward stimulating growth through fiscal stimulus measures, such as tax cuts and infrastructure spending programs among others. With exports still weak amid rising US tariffs, it remains uncertain whether these policies will be enough for Chinese manufacturers who are now facing increasing headwinds both domestically as well as abroad.
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