(Reuters) Growth in China's
manufacturing sector slowed faster than expected in April, an official
survey showed on Sunday, as producer price inflation cooled and
policymakers' efforts to reduce financial risks in the economy weighed
on demand.
The
National Bureau of Statistics' official Purchasing Managers' Index (PMI)
fell to a six-month low of 51.2 in April from March's near five-year
high of 51.8.
Analysts
polled by Reuters had predicted a reading of 51.6, the ninth straight
month above the 50-point mark that separates growth from contraction on a
monthly basis.
Demand weakened across the board
with the biggest decline in the input price sub-index, which fell to
51.8, its slowest expansion since June last year, from 59.3 in March.
Zhou
Hao, an economist at Commerzbank in Singapore, said recent sharp
declines in iron ore and onshore steel prices point to some of the
pressures the country's manufacturers are facing.
"We believe that this on one hand reflects that there is little improvement in underlying demand,"
Zhou wrote in a note.
"On the other hand, the de-leveraging effort by the Chinese authorities, has started to work."
Chinese
steel and iron ore futures tumbled to multi-month lows earlier this
month as market sentiment turned bearish on demand outlook and worries
mounted about a glut of steel later this year.
The employment sub-index slipped to 49.2 from 50.0 in March while the raw materials inventories sub-index was unchanged at 48.3.
Growth
in China's services sector slowed slightly to 54.0 in April, compared
with the previous month's reading of 55.1, which was the highest since
May 2014.
China's
economy grew a faster-than-expected 6.9 percent in the first quarter,
boosted by higher government infrastructure spending and the nation's
gravity-defying property boom.
But
growth is expected to slow as authorities step up a battle to cool the
property sector and as the central bank and banking regulator take steps
to contain financial risks.
The
People's Bank of China is expected to guide short-term interest rates
higher, and step up its oversight of the financial sector, amid a
crackdown on banks' shadow banking businesses.
Chinese leaders have pledged to
shift the emphasis to addressing financial risks and asset bubbles,
which analysts say pose a threat to the world's second-largest economy
if not managed properly.
President
Xi Jinping last week called for increased efforts to ward off systemic
risks to help maintain financial security, the official Xinhua news
agency reported.
Some
analysts believe China's economic growth may have peaked in the first
quarter but that it's on track to hit a target of around 6.5 percent
this year.
China's
producer price inflation cooled for the first time in seven months in
March as iron ore and coal prices tumbled, while property sales growth
slowed in the first quarter despite robust property investment.
The
private sector Caixin/Markit PMI manufacturing survey, which focuses
more on small and mid-sized firms, will be published on May 2. The
Caixin/Markit PMI is expected to come in at 51.0 for April, according to
a Reuters poll of economists, down from 51.2 in March.
(Source: Reuters; Reporting by Kevin Yao and Sue-Lin Wong; Editing by Sam Holmes)
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