Concern over China factories as exports dip

City A.M. Reporter
GROWTH among China’s factories unexpectedly slowed in April as new export orders fell, raising fresh doubts about the strength of the economy after a disappointing first quarter of the year.

The official purchasing managers’ index (PMI) fell to 50.6 in April from an 11-month high in March of 50.9. Analysts had expected the April PMI to be 51.

The pull back on the official PMI mirrored a similar decline in a preliminary HSBC PMI last week, suggesting China’s exports engine faces headwinds from the Eurozone recession and sluggish growth in the US.

China’s new government has signalled it will step up infrastructure investment, which analysts said will provide support for the economy in the second quarter.

“Overall, my general feel is that China is growing but slower than people expected say a month ago,” said Alvin Pontoh, economist at TDSecurities in Singapore.

“But I don’t think this is reason for alarm... this is probably what the new administration is looking for. Structurally, China cannot grow at nine or 10 per cent anymore, so over the next few years, you’d reasonably expect growth to edge lower to say seven per cent or so.”

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