Photo:Xinhua

China's manufacturing purchasing managers' index (PMI) for April dropped slightly to 50.8, but still indicates an expansion in manufacturing activity and shows the country's economy is recovering step by step.

This came after the index plunged to a record low of 35.7 in February when the coronavirus rattled China but was followed by a strong rebound with the index jumping to 52 in March, as domestic economic and social activities have been accelerating resumption and the virus began to recede within the country.

The comprehensive PMI output index registered at 53.4 in April, up from March's 53; and the non-manufacturing business PMI expanded to 53.2 in the month, up from March's 52.3, data from the National Bureau of Statistics (NBS) showed on Thursday.

A number above 50 indicates an expansion in activity, while a reading below that signals a contraction.

A production line is seen at a subsidiary of Beijing Electric Vehicle Co., Ltd., a new energy vehicle producer, in Cangzhou, Hebei province, on July 6, 2019. (Photo/Xinhua)

Chinese stocks rose on Thursday after official PMI data was released, with the benchmark Shanghai Composite Index up 1.33 percent and the Shenzhen Component Index up 1.99 percent by press time. 

The manufacturing PMI data showed China's economy is still expanding, and such expansion in two consecutive months reflected the production resumption among the majority of Chinese enterprises is proceeding orderly while gaining ground, Liu Xuezhi, a senior economist at the Bank of Communications, told the Global Times.

A variety of economic indicators spelled the positive figure for April. For example, nationwide electricity consumption has resumed to the same level as last year after a sharp plunge.

As of April 21, 99.1 percent of the Chinese industrial enterprises above designated size have resumed production with 95.1 percent of the workers in these enterprises back to work, according to data revealed by China's Ministry of Industry and Information Technology.

However, experts warned April's PMI data does not tell whether China's economy has already picked up given the now sluggish overseas demand.

Zhao Qinghe, a senior statistician with the NBS, noted the recovery in demand is weaker than in production. "As the coronavirus accelerates its spread widely overseas, the global economy has contracted sharply, bringing great challenges for China's foreign trade," Zhao said. 

The new export orders index in April plummeted 12.9 percent to 33.5, and the new import orders index declined by 4.5 percent, according to Zhao, who noted that 57.7 percent of surveyed enterprises reported a lack of orders as demand fell behind production, particularly in the textile, clothing and chemical sectors. 

"Currently, the biggest uncertainty and risk for China's economy is the drastic contraction in overseas demand while the coronavirus is hurting many countries, so it is very hard to see a substantial warm-up for China's economy and manufacturing industry at present," Liu noted, expecting a notable improvement after the second quarter.

Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology, echoed Liu, saying for months after April, the manufacturing sector is still likely to be weighed down by diminishing export orders, and PMI might be dragged down slightly into contraction given the current sluggish overseas demand.

The private Caixin manufacturing PMI on Thursday announced a decline to 49.4 in April from March's 50.1.