China Manufacturing Sector Growth At 4-Month High

China’s manufacturing sector grew at the fastest pace in four months in April, survey results from IHS Markit showed on Friday.

The Caixin manufacturing Purchasing Managers’ Index rose to 51.9 in April from an 11-month low of 50.6 in March. A score above 50 indicates expansion in the sector.

Driven by improved market conditions and greater customer demand, total new orders grew for the eleventh straight month in April.

Greater inflows of new work led goods producers in China to expand production volumes again in April, with the rate of expansion also improving to a four-month high.

The sustained increase in sales led to a further accumulation in backlogs of work. Consequently, manufacturers added to their staff numbers for the first time in five months.

Prices data showed a further rapid increase in input costs amid reports of supplier price hikes. The latest increase in expenses was the quickest since November 2017.
Companies often passed on higher costs to customers through higher factory gate charges, which rose sharply overall.

Output expectations remained markedly upbeat in April, though the level of positive sentiment edging down to a three-month low.

“Policymakers have expressed concerns about rising commodity prices on several occasions and urged adjusting raw material markets and easing businesses’ cost pressure,” Wang Zhe, senior economist at Caixin Insight Group said.

In the coming months, rising raw material prices and imported inflation are expected to limit policy choices and become a major obstacle to the sustained economic recovery, Wang added.

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