China's factory activity sees worst contraction since 2023

China's factory activity slipped into the worst contraction since December 2023, revealing early damage to the world's second-biggest economy from the trade war with the U.S.

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BEIJING -

April's official manufacturing purchasing managers' index (PMI) fell more than expected to 49 from 50.5 in March, the National Bureau of Statistics (NBS) said on April 30. Any number below 50 points to a contraction.

The non-manufacturing measure showed activity in construction and services grew less than forecast.

The indicators offer an alarming first official look at the health of China's economy after the Trump administration imposed sweeping tariffs of 145 per cent on Chinese products, a level expected to hurt a sector that contributed to nearly a third of the economy's growth in 2024.

"It's definitely worse than expected. It shows tariffs started to bite," Mr Robin Xing, chief China economist at Morgan Stanley, said on Bloomberg Television. He forecast a significant economic slowdown this quarter that could trigger more stimulus.

The offshore yuan extended its drop, declining 0.1 per cent to about 7.27 per U.S. dollar after the data missed expectations.