China manufacturing PMI registers unexpected drop in April

China's economy continued to slow down in April according to the results of various widely-followed surveys.

Caixin's manufacturing sector purchasing managers' index fell from a reading of 51.2 for March to 50.3 in April, its lowest level since last September.

Economists had forecast a reading of 51.3.

Commenting on the China General Manufacturing PMI data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said: "The downward pressure on manufacturing gradually emerged in April, with all indicators weakening. The Chinese economy may be starting to embrace a downward trend in the near term as prices of industrial products decline and active restocking comes to an end."

For his part, Julian Evans Pritchard, China economist at Capital Economics, pointed out how the export orders sub-index held up better than that for overall new orders.

That, Pritchard said, suggests the chief factor behind weaker growth is cooling domestic demand. The drop seen in the price subindices in both the Caixin PMI and the 'official' survey published at the weekend is consistent with the research boutique's projection for prices to drop back "markedly" over coming months, he said.

"The latest PMI readings aren’t the first sign that China’s economy has started to soften as the tailwinds from policy easing fade. Our China Activity Proxy (CAP) has been pointing to slower growth in recent months, after peaking in December. But the PMI readings for April appear to confirm this downward trend and suggest that the slowdown has extended into Q2," Evans-Pritchard said.

Results of a similar survey covering China's services sector published at the weekend also pointed to weaker growth.

The official non-manufacturing PMI retreated from 55.1 for March to 54.0 in April, a six-month low. In parallel, the official manufacturing PMI also fell short of expectations, slipping from 51.8 to 51.2 (consensus: 51.7).