China’s factory activity grew in April despite a tariff war with Washington, two surveys showed Tuesday, adding to signs a slowdown in the world’s second-largest economy might be bottoming out.
Activity was weaker than the previous month but an improvement over February, when manufacturing indicators fell to a three-year low.
“The worst of China’s slowdown in late 2018 and early 2019 is over,” said Bill Adams of PNC Financial Services Group in a report.
Caixin magazine’s monthly purchasing managers’ index decelerated to 50.2 from March’s 50.8 on a 100-point scale. A separate index by the China Federation of Logistics & Purchasing declined 0.4 points to 50.1, just above the 50-point line that indicates activity is accelerating.
Chinese economic growth held steady in the latest quarter at 6.4% over a year earlier. That raised hopes that Beijing’s efforts to reverse an economic downturn with higher government spending and more bank lending were gaining traction.
Analysts cautioned, however, that the world’s second-largest economy still faces downward pressure due to weak consumer demand at home and abroad.
Both of Tuesday’s surveys “still point to weak export growth,” Julian Evans-Pritchard of Capital Economics said in a report.
The data suggest “this quarter may end up being the cyclical trough in growth,” said Evans-Pritchard. “Faster credit growth should support economic activity, though we don’t anticipate a strong recovery.”
China’s exports to the United States, its biggest foreign market, have been hurt by President Donald Trump’s tariff hikes on $250 billion of Chinese goods in a fight over Beijing’s technology policy.
American and Chinese negotiators meet this week in Beijing for talks aimed at ending the dispute.