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China’s Manufacturing Expands at Slower Pace, Survey Shows (1)

May 01, 2013

China Manufacturing Expands at Slower Pace, Private Survey Shows

Employees at the Fiat SpA and Guangzhou Automobile Group Co. (GAC) manufacturing plant walk past door assemblies for Viaggio vehicles in Changsha, Hunan Province, China. Photographer: Nelson Ching/Bloomberg

A private gauge of Chinese manufacturing declined last month, adding to signs that growth in the world’s second-biggest economy will cool for a second straight quarter.

The final April reading of 50.4 for a Purchasing Managers’ Index (EC11CHPM) released today by HSBC Holdings Plc and Markit Economics compares with 51.6 for March and the preliminary reading of 50.5 given April 23. A reading above 50 indicates expansion.

The drop follows a fall in an official manufacturing index reported yesterday and lower-than-estimated gains in industrial output in the first quarter. The factory slump joins weakness in export demand and property-market overheating as risks that the growth slowdown will persist in the three months through June.

“The slower growth of manufacturing activities in April confirmed a fragile growth recovery” in the broader economy, Qu Hongbin, chief China economist with HSBC in Hong Kong, said in a statement. “The looming deflationary pressures also suggest softer overall demand conditions. All this is likely to weigh on the labor market, which is likely to invite more policy responses in the coming months.”

The median estimate of 12 analysts in a Bloomberg News survey was for a reading of 50.5.

Stocks in China extended declines after the report, in the first trading day following a three-day holiday. The benchmark Shanghai Composite Index (SHCOMP) dropped 0.7 percent at 9:54 a.m. local time, heading for the lowest level since December.

Machinery Profits

Machinery maker Sany Heavy Industry Co. (600031) said last week its net income fell 44 percent to 1.57 billion yuan ($255 million) in the first quarter while rival Zoomlion Heavy Industry Science & Technology Co. reported a 71.7 percent decline.

The government-backed Purchasing Managers’ Index for manufacturers had a reading of 50.6 last month, the National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday in Beijing. That compared with the 50.7 median forecast of analysts and a March reading of 50.9.

The economy expanded 7.7 percent in the first quarter, less than analysts’ forecasts and below the 7.9 percent pace in the final three months of last year.

The median estimate for second-quarter growth was 8 percent in a survey of 30 economists conducted April 18 to April 23, compared with an 8.2 percent median forecast of 31 analysts the previous month.

Growth in Chinese industrial companies’ profits slowed in March, with net income increasing 5.3 percent from a year earlier, down from a 17.2 percent pace in the first two months, the NBS said April 27.

The HSBC survey covers a sample of more than 420 companies, and the government PMI survey has a sample base of 3,000 companies in 21 industry groups.

--Zhou Xin. With assistance from Ailing Tan in Singapore and Cynthia Li in Hong Kong. Editors: Scott Lanman, Nerys Avery

To contact Bloomberg News staff on this story: Xin Zhou in Beijing at

To contact the editor responsible for this story: Paul Panckhurst at

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