Caixin Manufacturing PMI Slips Back Into Contractionary Territory

The Caixin manufacturing PMI came in below expectations, printing at 49.5, versus a consensus of 50.5. We are still above Jan levels near 49.0, but it signals an uneven recovery. The official manufacturing PMI also fell into contractionary territory, 49.2 from 51.9 in Mar. This is widening the divergence with better service related outcomes.

• Caixin noted that production was weighed down by faltering new orders, which fell for the first time in 3 months. Caixin stated this reflected softer than expected consumer spending, which comes after bumper retail spending figures.
• New export orders painted a better picture, but this didn't prevent staff losses. Also note Caixin said input costs and selling prices at factories slumped at the quickest rate in about seven years. No doubt falling commodity prices were a factor, but this also speaks to an uneven demand backdrop.
• Note the Caixin Services PMI will print tomorrow (not today as we posted earlier). The market expects a 57.0 reading versus 57.8 prior.
• The authorities appear mindful of the evolving nature of the recovery. Last week’s Politburo communique noted that Q1 data came in better than expected, but concluded "demand remained insufficient" while "promoting high-quality growth remained challenging.”