China_ April PMIs – weaker manufacturing PMIs on heightened US tariffs

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the manufacturing and non-manufacturing sectors in China, highlighting the impact of heightened US tariffs on economic indicators such as PMIs (Purchasing Managers' Index) [1][2][4]. Core Insights and Arguments 1. Decline in Manufacturing PMIs: - The NBS manufacturing PMI dropped to 49.0 in April from 50.5 in March, marking the lowest level since May 2023. This decline was attributed to the negative effects of increased US tariffs [1][4]. - The Caixin manufacturing PMI also fell to 50.4 in April from 51.2 in March, indicating a slowdown in manufacturing activity [1][9]. 2. Sub-index Performance: - Key sub-indexes within the NBS manufacturing PMI showed significant declines: - Output sub-index decreased to 49.8 from 52.6 - New orders sub-index fell to 49.2 from 51.8 - Employment sub-index dropped to 47.9 from 48.2 [4][8]. - The manufacturing new export order sub-index fell sharply to 44.7 in April from 49.0 in March, the lowest since December 2022, reflecting weaker external demand [4][9]. 3. Non-Manufacturing PMI Trends: - The official non-manufacturing PMI decreased to 50.4 in April from 50.8 in March, with the services PMI also declining to 50.1 from 50.3 [1][4]. - The construction PMI fell to 51.9 in April from 53.4 in March, although infrastructure-related construction PMI rose to 60.9 from 54.5 [4]. 4. Deflationary Pressures: - The input cost sub-index decreased sharply to 47.0 from 49.8, indicating deflationary pressures in the manufacturing sector. Output prices also fell to 44.8 from 47.9 [8][9]. - Companies reported that increased competition among vendors led to a drop in input costs, which were often passed on to customers through lower selling prices [9]. Additional Important Insights - The report indicates that larger manufacturers experienced a more significant slowdown in activity, with PMIs for large, medium, and small enterprises falling to 49.2, 48.8, and 48.7, respectively [8]. - The overall economic sentiment is cautious, with market expectations not being met, as evidenced by the lower-than-expected PMI readings [2][4]. This summary encapsulates the critical findings from the conference call regarding the current state of the manufacturing and non-manufacturing sectors in China, emphasizing the adverse effects of US tariffs and the resulting economic indicators.