China export orders rise at fastest pace in 3.5 years

The Caixin/S&P Manufacturing Purchasing Managers' Index (PMI) survey showed that manufacturing output and new orders increased at a faster pace in April, rising to 51.4 from 51.1 in March.

This was the fastest pace since February 2023 and was higher than analysts' forecasts of 51. A reading above 50 reflects expansion in manufacturing, with new export orders growing at the fastest pace in nearly 3-1/2 years.

"Overall, the manufacturing sector continued to improve in April, with rapid expansion in supply and demand. The transportation and logistics system operated smoothly," said Wang Zhe, senior economist at Caixin Insight Group.

According to data from the National Bureau of Statistics (NBS), the official PMI stood at 50.4 points in April compared to 50.8 in March, marking the second consecutive month of manufacturing growth.

While the Caixin/S&P PMI focuses more on small and medium-sized private manufacturing enterprises, the NBS index represents a broader range of manufacturing, including large state-owned enterprises.

NBS senior statistician Zhao Qinghe said the new orders and new exports indexes of the automobile, machinery and electrical equipment industries were all above 53, indicating that domestic and foreign market demand for these products is increasing.

However, both PMI surveys warned of rising input costs and competition. “Although economic activity continues to expand, many manufacturers are facing higher costs,” Zhao Qinghe said.

Manufacturers are facing a six-month high in input costs due to high prices for raw materials such as metals and crude oil, said Wang Zhe of Caixin Insight Group. As a result, companies are cutting prices to attract orders. They are also cautious about hiring more workers. The number of jobs fell for the eighth straight month due to restructuring efforts and resignations.

"Increased purchases and inventories reflect a positive outlook for businesses. However, employment has not improved and low selling prices are eating into profits," Wang said.