Growth in China’s manufacturing sector slowed faster than expected in April, an official survey showed on Sunday, as producer price rises lost steam and authorities moved to tackle risks in the property market and credit growth. The official Purchasing Managers’ Index (PMI) fell to 51.2 in April from the previous month’s 51.8, which was the strongest reading since April 2012. 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.
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 a gravity-defying property boom.
But growth is expected to cool as authorities step up a battle to cool the property sector while the central bank and banking regulator have take steps to contain financial risks.
The central bank 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 handed well.
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.