Chinese manufacturing activity continued to improve in April, with an important index remaining in expansion territory, official data showed on Friday.
The manufacturing purchasing managers' index (PMI), a key measure of factory activity in China, posted at 50.1 in April, unchanged from the March reading but up from 49.9 in February, according to the data released by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP).
A reading above 50 indicates expansion, while a reading below 50 represents contraction. The NBS manufacturing PMI samples 3,000 enterprises of various sizes nationwide.
Zhao Qinghe, a senior analyst with the NBS, said China's manufacturing PMIs in the last three months lingered around the expansion/contraction threshold, but some PMI sub-indices in April showed encouraging signs.
The production sub-index posted at 52.6, the highest monthly reading since November last year, he said. The sub-index for raw material purchase prices remained below the threshold at 47.8, but it has continued to rise notably since January of this year, when it stood at 41.9.
The sub-index for production and business activity expectations posted at 59.5, indicating relatively good sentiment, Zhao said.
"Chinese companies are cautiously optimistic about economic growth prospects, thanks to a string of encouraging signals in both the Chinese and global economies and a price rebound in commodities such as oil," he said.
However, Zhao said China's manufacturing sector faces downward pressure.
Domestic and global demand are still weak. The new orders sub-index posted at 50.2 in April, unchanged from March's reading, but was lower from previous years for the same time period. The sub-index for new export orders fell to 48.1, the lowest monthly reading since November 2013.
China's manufacturing sector is still in a restructuring and destocking phase, and some traditional industries are still plagued by overcapacity, he said.
The sub-index for finished goods inventory posted 48.0 in April, down from 48.6 in March, NBS data showed.
Bank of Communications said in a note that April's PMI indicated China's manufacturing sector continued weak expansion.
"April's PMI has failed to rise as it usually has in previous years, and the reading was 4.8 percentage points lower than the historical average, which indicates that China's manufacturing sector still faces great pressure and economic growth momentum is still weak," it said.
But rebounds in the PMI sub-indices for production and raw material purchase prices, together with a recent rise in power use and raw material prices, were signals that China's economy is stabilizing, the bank said in the note.
The PMI sub-indices for small- and medium-sized enterprises (SMEs) rebounded significantly in April, which the bank attributed to the government's growth-supportive measures, especially those targeting SMEs, including tax breaks and streamlining administration.
NBS data showed that April's PMI for medium-sized enterprises was 49.8, very close to the threshold reading of 50 and up from March's reading of 48.3.
PMI for small manufacturers was 48.4, higher than March's 46.9, and large manufacturers posted at 50.6 last month, down from 51.5 in March, the data showed.
Given the weak growth momentum, Bank of Communications suggested more supportive measures, including fiscal and monetary measures, to lower operating costs and create a better business climate for enterprises.
The Chinese economy expanded 7 percent year on year in the first quarter of 2015, the lowest quarterly growth rate since 2009.
