BEIJING (Reuters) – Activity in China's huge manufacturing sector slowed in April as export orders slowed, further pointing to weaker economic growth, while a smoldering Sino-US trade series increased risks to the industrial sector.
The PMI published Monday fell to 51.4 in April, from 51.5 in March, but remained well above the 50-point mark, which separates growth from contraction on a monthly basis. It was the 21st consecutive month that business conditions in China expanded.
Analysts surveyed by Reuters predicted that the index would narrow slightly to 51.3.
But weaker reading, especially slower export orders, heightens concern about an expected loss of momentum in the world's second largest economy as policymakers steer debt risk and a heated trade chain with the United States.
"Supporting the economy by easing environmental pollution controls should now have largely taken its course," said Chang Liu, China economist at Capital Economics, in a statement to clients.
"Slower growth is likely over the coming months as economic activity intensifies due to weaker credit growth and the cooling real estate market."
Beijing is in the third year of a broad effort, a dangerous build-up of political decision-makers seem to have successfully mastered the challenge of mitigating financial risks without jeopardizing growth.
The sub-index for production remained unchanged at 53.1, while total order intake fell from 53.3 to 52.9.
The still-strong tech sector, which slowed China's solid export growth in 2017, could come under pressure as growing tensions between China and the US threaten to send billions of dollars into cross-border trade.
Even in the latest purchasing managers' index, the weakness in the trading sector eased off, with the sub-index for export orders dropping from 51.3 to 50.7.
There is also growing speculation that China is considering easing its monetary policy, as the risk of a wholesale trade war with the United States is clouding prospects for the major growth drivers of the two "old economies" of heavy industry and "new economy" tech -companies.
The service industry showed a "steady development," China's National Bureau of Statistics said in a statement. The official PMI for the services industry rose from 54.6 in March to 54.8, which is a solid activity.
The service sector is responsible for more than half of the Chinese economy, and rising wages give Chinese consumers more purchasing power
The manufacturing and services manufacturing PMI rose from 54 to 54.1 in April, well above the
50 mark separating expansion from contraction.
Reporting by Yifan Qiu and Matthew Miller; Cultivation of Shri Navaratnam