Improvement in China's manufacturing conditions extend into Q2 2024

Greater new work inflows, including from abroad, supported faster output growth in April. As a result, manufacturers raised their purchasing activity and inventory holdings.

Firms remained cautious with hiring even as backlogs accumulated. Average selling prices also declined even as input costs increased, while optimism in the future eased since March, S&P Global said in a release.

The headline seasonally-adjusted Caixin China PMI for manufacturing rose to 51.4 in April, up from 51.1 in March. This indicated a sixth successive monthly improvement in the health of the sector, with growth the most pronounced in 14 months.

Underpinning the latest acceleration in manufacturing sector growth was better demand conditions. Incoming new orders expanded at the fastest pace in over a year, supported by improvements in underlying demand conditions and marketing efforts from manufacturers.

Additionally, new orders from abroad expanded at the fastest pace for nearly three-and-a-half years.

Global market demand improved at the start of the second quarter, according to panelists. In turn, Chinese manufacturers raised their production levels at the fastest pace since May 2023, though that still resulted in additional backlog accumulation.

Sub-sector data revealed that the investment goods sector recorded the fastest growth across the measures of new orders, output and backlogs.

Purchasing activity, meanwhile, rose in line with higher production, further contributing to higher stocks of purchases in April.

Anecdotal evidence revealed that some manufacturers also raised their holdings of raw material and semi-finished items for safety stock building.

The level of post-production inventories rose in April. Although marginal, this marked the first increase in warehouse goods in three months.

Despite rising new work inflows and capacity pressures, Chinese manufacturers remained cautious with hiring. Employment levels fell for an eighth straight month in April amidst resignations and redundancies due to restructuring efforts.

Fibre2Fashion News Desk (DS)