Factory activity eases, service sector gains in April

Chinese factory growth has slowed slightly, according to a monthly survey released yesterday that showed activity in the world’s No. 2 economy holding up despite worries over trade tensions with the U.S.

The official purchasing managers’ index came in at 51.4 for April, easing from 51.5 in the previous month but still above the 50-point mark that separates expansion from contraction on the index’s 100-point scale.

The latest numbers come amid simmering trade tensions between Beijing and Washington, with potential implications for China’s sprawling export-oriented manufacturing sector.

The trade conflict will be in the spotlight again this week as U.S. Treasury Secretary Steve Mnuchin leads a delegation to Beijing for talks aimed at defusing the threat to economic relations between the world’s two largest economies.

The China Federation of Logistics & Purchasing’s survey found that factory output was stable but new orders and new export orders weakened for the month, indicating waning demand.

“Imports and exports continued to maintain growth, [but] the growth rate has slowed down,” said Zhao Qinghe, senior statistician at the National Bureau of Statistics, which released the data on its website .

The latest numbers assuaged fears about a slowdown in China’s economy, which grew at an unchanged 6.8 percent pace in the first quarter. Forecasters are expecting growth to cool this year as Beijing tries to rein in rising debt levels.

“The official manufacturing PMI points to economic conditions having remained healthy in April,” Chang Liu of Capital Economics said in a commentary. “Slower growth is likely in the months ahead as the drags on economic activity from weaker credit growth and the cooling property market intensify.”

Activity in the rest of China’s economy also held up fairly well, with further growth in the services sector, which is playing an increasingly important role as communist leaders in Beijing pivot the country away from its agricultural and industrial roots. The group’s non-manufacturing purchasing managers’ index rose to 54.8 from 54.6 in March. AP