China's factory index dips as new orders shrink
Manufacturing activity the worst in a year, bolstering calls for fresh efforts to spur economy
Mainland factories last month suffered their fastest drop in activity in a year as new orders shrank, a private business survey showed on Monday, hardening the case for fresh stimulus measures to halt a slowdown in the world's second-largest economy.
The latest indication of deepening factory woes raises the risk that second-quarter economic growth may dip below 7 per cent for the first time since the depths of the global crisis, adding to official fears of job losses and local-level debt defaults.
The HSBC/Markit purchasing managers' index fell to 48.9 in April - the lowest since April 2014 - from 49.6 in March, as demand faltered and deflationary pressures persisted.
The number was lower than a preliminary reading of 49.2 and also fell below the 50-point level that separates growth from contraction compared with the previous month.
"Today's downbeat PMI reading suggests that underlying economic momentum has continued to soften, even as a rebound in April's activity data still appears likely given fading seasonal distortions," Capital Economics' economist Julian Evans-Pritchard said.
The overall new orders sub-index dipped to 48.7 last month, the sharpest contraction in a year. It suggested a marked deterioration in domestic demand, as new export orders showed tentative signs of improvement.
"China's manufacturing sector had a weak start to Q2, with total new business declining at the quickest rate in a year while production stagnated," Markit economist Annabel Fiddes said.
