China: PMIs disappointed in April – UOB

UOB Group’s Economist Ho Woei Chen, CFA, reviews the latest PMIs results in the Chinese economy.

Key Takeaways

“China’s official manufacturing PMI unexpectedly contracted in Apr for the first time since its border reopening this year. External demand headwinds remain the key drag to China’s recovery.”

“Despite moderating and coming in below expectation in Apr, the nonmanufacturing PMI still indicated a strong pace of expansion. However, we see some contradictions in the components where employment has contracted at a sharper pace while unlike the manufacturing sector, the non-manufacturing sector recorded an improvement in both the selling and input price indexes which suggests that stronger domestic demand is translating to prices.”

“Brisk tourism and consumption at the start of the Labour Day holiday (29 Apr – 3 May) as reported by China’s state media indicates that there is room for further recovery in private consumption demand.”

“We expect China’s GDP to expand by 5.6% in 2023 (2022: 3.0%).”