HSBC/Markit flash Purchasing Managers Index for April rose to 48.3 from March’s final reading of 48
China’s factory activity shrank for the fourth month in a row in April, signalling economic weakness into the second quarter, a preliminary survey showed today.
However the pace of decline eased helped by policy steps to halt the slowdown.
Analysts see initial signs of stabilisation in the Chinese economy due to the government’s targeted measures to underpin growth, but believe more policy support may be needed as structural reforms put additional pressure on activity.
The HSBC/Markit flash Purchasing Managers Index (PMI) for April rose to 48.3 from March’s final reading of 48, but was still below the 50 line separating expansion from contraction.
Annual growth slowed to 7.4% in the first quarter from a year earlier, its slowest reading in 18 months, but the pace was just ahead of market expectations and seemed to soothe fears of a sharp downturn.
China’s central bank will cut the amount of deposits rural banks must hold as reserves by between 0.5 and 2 percentage points, it said yesterday, the latest in a series of measures to help combat the slowing economy.
Analysts estimated that the reserve cut could release 110 billion yuan ($ 17.64 billion) of bank liquidity.
Other economists however expect a cut in the reserve requirement ratio for all banks later this year, as protracted economic weakness fuels capital outflows, raising the pressure on the central bank to pump more liquidity into the economy.