Robotic arms install vehicle and motorcycle wheel parts at an automotive parts assembly factory in a local industrial park in Huaibei city, East China's Anhui Province, on April 22, 2023. China's auto manufacturing and sales are gaining pace this year. Photo: VCG

China's private Caixin Manufacturing Purchasing Managers' Index (PMI) stood at 49.5 in April, down from previous month's 50.0. Though the industry is facing headwinds in market demand and employment, the industry confidence index has showed a strong momentum.

This index reflects the operational condition of the country's small private manufacturers and has, temporarily, fallen into the contraction territory since February for the first time.

The official PMI released by the National Bureau of Statistics on April 30 also dropped to 49.2 for April. However, the strong growth of China's services sector lifted the official composite PMI to 54.4 in April.

According to Caixin's survey, the index for new orders dropped below 50 due to weak market demand and a decline in the number of clients, ending its expansion seen in February and March. 

Overseas demand rebounded to expansion territory in April due to improved export procedures, while the global economic downturn also capped the growth rate to some extent. 

Employment in April also hit the lowest level during the recent three months due to some enterprises' cost-reduction measures to cut payrolls. 

Entrepreneurs in the manufacturing industry held onto their positive attitude towards the development of the sector as the industry confidence index has kept strengthening to the second-highest level in nearly two years, even though both supply and demand dropped.

Enterprises maintained that market demand would improve as the strict COVID-19 related restrictive measures were removed, coupled with enhanced expectations for growth. The government's predictable supportive policies, higher investment and new products will boost the industry's overall growth outlook.

Caixin analysts Wang Zhe said that employment situation is likely to remain difficult for young people which should be addressed over the course of the economic recovery. Wang suggested that preferential policies should focus on boosting domestic demand, improving employment, and improving market expectations in the coming months.  

Global Times