In April, Caixin'S China Manufacturing PMI Recorded 51.9, The Highest Since 2021

Caixin China's manufacturing PMI (Purchasing Manager's index) in April 2021 released on April 30, 2021, rose 1.3 percentage points to 51.9, the strongest since 2021, indicating that the recovery of manufacturing industry accelerated at the beginning of the second quarter.

This trend is not consistent with the National Bureau of statistics manufacturing PMI. The PMI of manufacturing industry in April, released by the Bureau of statistics, was 51.1, down 0.8 percentage points from March.

The improvement of market sentiment promoted the simultaneous expansion of supply and demand in the manufacturing industry, with both the production index and the new order index reaching four month highs. Although the epidemic situation has rebounded in some countries, foreign demand has also maintained a strong momentum. The index of new export orders has been in the expansion range for the second consecutive month, and the growth rate has expanded.

The improvement of supply and demand led to the end of April employment index contraction for four consecutive months. In December 2020, it was the first time to stand on the boom and bust line, indicating that with the improvement of market prosperity, enterprises began to increase the amount of labor. Although the absolute value of employment improvement is not high, the employment index has recorded the second highest since February 2013.

The price index continued to rise and inflationary pressure increased further. In April, the purchasing price index continued to rise in the expansion range, refreshing the highest value since December 2017. The market prices of raw materials continue to drive up the cost of manufacturing enterprises, and the prices of industrial metals such as steel and chemical raw materials continue to soar. Affected by this, the ex factory price index of manufacturing enterprises dropped sharply, but it continued to be significantly higher than the boom and bust line, especially the rise of intermediate product prices. The input price index continues to be higher than the ex factory price index, squeezing the profits of downstream enterprises.

In April, the supplier supply time index decreased significantly in the contraction range, which was different from that affected by the epidemic control before. The main reason for the extension of supplier supply time in that month was the shortage of raw materials.

In the face of strong market demand, the purchasing volume of manufacturing enterprises increased significantly, the purchasing volume index expanded strongly, and the purchasing inventory of raw materials also changed from decline to increase for the first time in this year. The improvement of market demand consumes a lot of finished goods inventory. The finished product inventory index has been in the contraction range for two consecutive months, and the decline rate has been expanded. Enterprises generally said that they used the original inventory when delivering orders.

Companies remain optimistic about the outlook for output, but the degree of optimism has dropped slightly to a three-month low. The industry expects that the epidemic will come to an end, and the suppressed demand will be released. In addition, the release of new products has supported the confidence of enterprises.

Wang Zhe, a senior economist at Caixin think tank, said that in April 2021, supply and demand of manufacturing industry expanded significantly, overseas demand was relatively stable, and the employment market improved. At present, the manufacturing industry is still at a high level, and the economic recovery momentum remains in the post epidemic era. In the future, the focus is still on inflation, and the price index has been rising for several months without any improvement. Recently, the high-level meeting has repeatedly mentioned the issue of rising commodity prices and proposed to strengthen market regulation of raw materials and other industries to ease the cost pressure of enterprises. In the coming months, the rising prices of raw materials and imported inflation will restrict the policy space and become the main obstacle to sustained economic recovery.