Factory activity in China rose for a second straight month in April, official data showed on Thursday, showing resilience despite rising energy prices and transport disruptions caused by the war in the Middle East.
According to the National Bureau of Statistics (NBS), the manufacturing purchasing manager’s index – a key measure of industrial activity – was 50.3 in April, above the 50-point mark that separates expansion and contraction.
That figure fell from 50.4 in March, but was ahead of a forecast of 50.1 in a Bloomberg survey of economists.
The world’s second-largest economy has been struggling with a slowdown in domestic demand and investment in recent years that has weighed on its large manufacturing sector.
March’s figure was the highest in a year, with manufacturing activity contracting in 10 of the previous 11 months.
April statistics showed that economic output had “maintained expansion” while manufacturing “continued to show a positive trend”, according to NBS statistician Huo Lihui.
There was strong demand for electrical and IT equipment, but weaker market activity for oil and coal processing, Huo said in a statement.
But manufacturers faced higher costs as raw material prices rose sharply, especially in the energy and chemicals sectors, Huo said.
The data suggest Chinese manufacturers remain resilient despite the global economic disruption caused by the US-Israeli war with Iran that has seen energy prices rise and Tehran restrict access to the vital Strait of Hormuz.
“The PMI shows that the manufacturing sector has not been adversely affected by the conflict in the Middle East,” according to Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.
“The stance of monetary policy appears to have a slightly accommodative bias, which helps cushion higher energy prices,” he said in a note.
Julian Evans-Pritchard at Capital Economics added that exports and strong external demand were the main drivers.
“Increasing demand for memory chips and green technology products is likely to play a key role,” he said.
Despite the positive factory data, China’s non-manufacturing PMI – a gauge of activity in services and construction – fell to 49.4 in April from 50.1 in March.
Business activity in the wholesale and retail sectors contracted, suggesting that consumer demand remains weak.
