The April manufacturing Purchasing Managers' Index (PMI) showed a slight decline, primarily dragged down by the new orders component, while support mainly came from the raw materials inventory component. From a relative perspective, supply has strengthened compared to demand, external demand remains stronger than domestic demand, and raw materials inventory has increased more significantly than finished goods inventory. Profits continue to tilt toward upstream industries. Key observations are as follows:

In April, the manufacturing PMI recorded 50.3%, down 0.1 percentage points from March. The services PMI stood at 49.6%, a decrease of 0.6 percentage points from the previous month, while the construction PMI fell to 48.0%, down 1.3 percentage points.

First, new export orders outperformed seasonal trends. Despite ongoing disruptions to global supply chains due to the Middle East situation, China’s comprehensive industrial system and stable supply chain provide solid support for exports. Additionally, increased stockpiling demand from major overseas economies has contributed to relatively strong new export orders. However, the new orders index declined during the same period, indicating that external demand remains stronger than domestic demand. This suggests room for improvement in domestic demand recovery, highlighting the importance of monitoring the implementation of policies aimed at boosting domestic consumption.

Second, the raw materials inventory index reached its highest level since March 2023. Against the backdrop of persistently high raw material purchase prices, this may reflect precautionary stockpiling by some enterprises. The ongoing developments in the Middle East and their potential imported impact on domestic market prices and related industries warrant continued attention.

Third, profit distribution continues to favor upstream segments of the industrial chain. Meanwhile, corporate production and operation expectations continue to improve, aligning with current inventory and production performance. Continued monitoring of the sustainability and marginal changes in both domestic and external demand recovery is necessary.

New orders declined slightly while production continued to improve. From the demand side, overseas demand performed well in April, with the new export orders index rising to 50.3%, up 1.2 percentage points from the previous month, clearly exceeding seasonal expectations and returning to expansion territory. This contributed to a slight decline in the overall new orders index, which also slightly outperformed seasonal trends. On the production side, the manufacturing production index further increased to 51.5% in April, up 0.1 percentage points from March. Structurally, equipment manufacturing and high-tech manufacturing remained in expansion territory.

Both raw material and finished goods prices declined slightly from high levels, while inventory increased. Uncertainty in the Middle East persists, with the raw material purchase price index at 63.7% in April, down 0.2 percentage points from the previous month but still elevated. Price increases were particularly notable in basic raw material industries. The ex-factory price index stood at 55.1%, down 0.3 percentage points from March but remaining above 55%. Corporate expectations remain optimistic, and raw materials inventory increased. The production and operation expectation index rose to 54.5%, up 1.1 percentage points from the previous month, while the raw materials inventory index increased to 49.3%, up 1.6 percentage points.

The construction PMI turned downward in April. The construction business activity index fell to 48%, down 1.3 percentage points from the previous month, failing to sustain the rebound seen in March. Infrastructure-related activities remained in expansion, with the civil engineering建筑业 business activity index still above 52%, despite a decline from the previous month. The new orders index for construction remained below the 50-point threshold, indicating that investment demand still requires consolidation. The construction business expectation index for April stood at 50.5%, unchanged from March.

The services PMI fell below the expansion threshold. The services business activity index dropped to 49.6% in April, down 0.6 percentage points from the previous month. By sector, industries such as railway transport and postal services maintained high activity levels above 55.0%, while wholesale, retail, and consumer services remained below the threshold, indicating weaker market activity. However, the services business expectation index rose to 55.4%, up 0.6 percentage points from the previous month, entering a higher expansion range above 55.0%.

Risks include slower-than-expected recovery in domestic demand, changes in domestic policies, and shifts in the international trade environment.