Chinese factory activity declines again

Factory activity in China shrank in April for the fourth straight month.

The HSBC/Markit flash Purchasing Managers Index – which is based on surveys of thousands of companies – showed continued contraction.

The pace of decline did ease though due to government moves to arrest the slowdown.

Analysts said they are seeing initial signs of stabilisation in China’s economy.

But they believe the government needs to do more in the way of stimulus measures to stop the economy slowing too much.

That is because structural reforms in China are putting additional pressure on manufacturing activity.

The PMI survey showed contractions in new orders and output moderated somewhat, though employment decreased at a faster rate and new export orders slipped after a pick-up in March, suggesting that the external environment remains difficult for Chinese firms.

Signs of a slowdown in the first quarter had been evident in a series of economic indicators, prompting the government to unveil a series of measures to promote growth, although it has ruled out major stimulus.

It has also said that its main focus will be on job creation, and that it did not matter if growth in 2014 came in a little below the official target of 7.5 percent.

The country’s top economic planning body reiterated the message on Wednesday, saying that the economy will be fine without any heavy stimulus.

with Reuters