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China's April PMI Rises on Strong Output, New Orders

China's official purchasing managers' index rose to 59.2 in April from 58.4 in March, boosted by strength in output and new orders, the China Federation of Logistics and Purchasing said on Thursday.

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CNBC.com
China, Chinese Flag

The PMI is designed to provide an early snapshot of the health of Chinese manufacturing. A reading over 50 indicates an expansion of activity, while one below 50 suggests contraction.

But Zhang Liqun, a researcher with the Development Research Centre, a think-tank that reports to China's cabinet, played down the rise and said it had to be put in the context of other figures pointing to slower growth.

Gross domestic product expanded 10.6 percent in the first quarter from a year earlier compared with 11.9 percent in all of 2007.

"Economic growth is likely to slow further, as can be seen from the change in the sub-index for export orders," Zhang said in a statement released by the association, which compiles the PMI on behalf of the National Bureau of Statistics.

The index for new export orders slipped to 58.9 from 59.1 in March. Moreover, only four of 20 sectors mapped by the report -- electrical and machinery, clothing and shoes, general equipment manufacturing and printing -- had an index reading over 60.

Business input prices rose further, reinforcing the government's case that inflation is China's main economic challenge this year.

Nineteen of the 20 sectors covered by the report had an input price reading over 60; for oil processing, it was over 90.

Rising prices were the major concern for purchasing managers, in the latest survey, followed by cashflow strains.