Rapid Growth in China’s Manufacturing Sector driven by PMI Survey; Automobile, Machinery and Electrical Equipment Industries Attract Customers.

The manufacturing sector in China has seen rapid expansion in supply and demand, with a surge in new export orders. This growth was driven by the purchasing managers index (PMI) survey conducted by Caixin/S&P, which showed that output and new orders of manufacturing enterprises increased rapidly in April. The index increased to 51.4 points from 51.1 points in March, reflecting a fast pace of growth not seen since February 2023.

The automobile, machinery, and electrical equipment industries were particularly attractive to customers, with their new order and new export indexes all above 53. This indicates that there is domestic and foreign market demand for these products.

Despite the positive outlook of businesses, they are facing rising input costs and competition. According to Wang Zhe, senior economist at Caixin Insight Group, manufacturers are facing a six-month high in input costs due to high prices of raw materials such as metals and crude oil. As a result, businesses have had to reduce prices to attract orders and appear cautious in recruiting more workers due to restructuring efforts and resignations.

While employment has not improved significantly, businesses have increased purchases and inventories based on the positive outlook for future sales. However, low selling prices are eating into profits for many businesses.