Stock markets have slipped in early trading this morning following data which showed China’s manufacturing sector is contracting.
According to HSBC’s latest purchasing managers’ index (PMI) for China’s manufacturing sector, output and new orders pushed the index’s reading to a two-month high but still showed the sector in decline.
The PMI came in at 48.3 for April, and any reading under 50 indicates a contraction.
The Eurostoxx 50 index fell 0.2 per cent this morning, while leading indices in France, Germany and Sweden all declined, although the FTSE 100 is up slightly by 0.2 per cent.
China’s growth and indicators are becoming increasingly important data points for investors as the country’s influence on global demand and output now puts it second only to the US in terms of its economic size.
Hongbin Qu, chief economist for China at HSBC, said: “Domestic demand showed mild improvement and deflationary pressures eased, but downside risks to growth are still evident as both new export orders and employment contracted.
“The State Council released new measures to support growth and employment after the release of first quarter GDP. While initial impact will likely be limited, they signalled readiness to do more if necessary. We think more measures may be unveiled in the coming months and the People’s Bank of China will keep sufficient liquidity.”
