Caixin China manufacturing PMI edges down to 49.4

BEIJING -- The latest Caixin General China Manufacturing Purchasing Managers' Index (PMI), an indicator of manufacturing activity, edged down to 49.4 in April.

The private survey, conducted by financial information service provider Markit and sponsored by financial media group Caixin, produced a reading on Tuesday fractionally down from 49.7 in March and below the market forecast of 49.8, signalling marginal deterioration in operating conditions.

A reading above 50 indicates expansion, while a reading below 50 represents contraction. The Caixin index has remained below the neutral 50 value for more than a year.

China's stock market headed upward despite the disappointing data, with the key Shanghai stock index rising over 1 percent in the morning session.

The survey showed relatively weak market conditions and softer client demand had led firms to be cautious towards their production schedules, while new order books stagnated following a slight expansion in the previous month.

Meanwhile, weaker foreign demand continued to weigh on orders, with new export work falling for a fifth consecutive month.

Companies displayed cautious inventory policies in April, with stocks of finished goods and inputs both falling at faster rates.

"Overall, the data showed the foundation of China's economic recovery was yet to solidify and the government still needs to pay attention to downside risks," said He Fan, chief economist at the Caixin Insight Group.

The data came on the heels of the official PMI, which showed manufacturing activity expanded for a second month in a row in April.

The official PMI came in at 50.1 last month, slightly down from March's 50.2, according to data released by the National Bureau of Statistics and the China Federation of Logistics and Purchasing on Sunday.

The official PMI samples 3,000 relatively large enterprises in China. The Caixin PMI samples 420 small and medium-sized manufacturing enterprises and is relatively volatile due to its small sample size and the dominance of small enterprises.