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Chinese Manufacturing Hits 12-Month Low: U.S. Grows, But at a Slower Rate

Posted By Paul Tate, April 28, 2015 at 6:59 AM, in Category: Manufacturing Leadership Community

Connected_Map.jpgThe latest figures measuring manufacturing activity during April suggest China’s industrial sector has hit its lowest level of performance for the last year, adding further pressure on the Chinese government to find ways of boosting economic growth.

The Chinese flash HSBC/Markit Purchasing Managers’ Index (PMI) for April, released last week, records a PMI figure of 49.2, dipping further into contraction from its 49.6 level in March, and down markedly from its 50.7 level in February.

A PMI figure above 50 marks expansion; below 50 signifies contraction.

Markit economist Annabel Fiddes noted that China’s manufacturing sector has continued to be hit by weak demand, falling prices and falls in employment.

"Production increased only marginally, while total new business declined for the second successive month,” said Fiddes, in a prepared statement. “Relatively weak demand conditions were also highlighted by stronger deflationary pressures in the sector, with both input and output prices falling at faster rates. Meanwhile, job shedding across [Chinese] manufacturing firms was recorded for the 18th month in a row."

This news increases the urgency behind the Chinese government’s new Made in China 2015 initiative to reinvigorate Chinese industry over the next ten years around the country’s own smart manufacturing initiative, announced by Premier Li Keqiang In his opening speech at China’s annual National People’s Congress in Beijing in March.

"The downward pressure on China's economy is intensifying," Li warned the 3,000 delegates gathered in the Great Hall of the People on Beijing's Tiananmen Square. "Deep-seated problems in the country's economic development are becoming more obvious. The difficulties we are facing this year could be bigger than last year."

More details of the new Make In China 2015 industrial renewal program, which hopes to help Chinese companies move away from traditional, labor-intensive production models and create more sophisticated, high-value manufacturing businesses, are expected over the next month.

In the US, meanwhile, manufacturing is still growing relatively strongly with a flash PMI of 54.2 for April, but this is at a slower rate than in March when the PMI figure hit 55.7, and marks the lowest growth rate so far for 2015. U.S. manufacturing job creation remained solid, however, and was little-changed since March.

“[U.S.] manufacturers saw a disappointing start to the second quarter, reporting the weakest growth since January,” commented Chris Williamson, Chief Economist at Markit in a statement. “Key to the slowdown was a weakening of export orders, in turn a symptom of the loss of competitiveness arising from the dollar’s strength.

“However, while exporters are suffering, domestic demand looks to have remained robust, helping to sustain a reasonably strong production trend,” he added. “The goods-producing sector is by no means collapsing under the weight of the strong dollar, and fears of a sharp slowdown consequently look overplayed.”


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Written by Paul Tate

Paul Tate is Research Director and Executive Editor with Frost & Sullivan's Manufacturing Leadership Council. He also directs the Manufacturing Leadership Council's Board of Governors, the Council's annual Critical Issues Agenda, and the Manufacturing Leadership Research Panel. Follow us on Twitter: @MfgExecutive



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