Chinese manufacturing activity shrank more than expected in April as local producers were slammed by a sharp drop in overseas orders after U.S. President Donald Trump imposed steep trade tariffs against Beijing.
The official manufacturing purchasing managers index read 49.0 in April, compared to expectations of 49.7, government data showed on Wednesday. The print also fell sharply from the 50.5 seen in the prior month.
A reading below 50 indicates a contraction, with China’s manufacturing PMI now back in contraction territory after two months of gains.
The drop in manufacturing activity came as China became embroiled in a bitter trade war with the U.S. through April. Trump imposed 145% tariffs on Chinese goods, while China retaliated with a 125% levy on American goods.
But the U.S. tariffs are expected to largely stymie American demand for Chinese goods- a trend that bodes poorly for Chinese manufacturers, given that U.S. exports represent a major revenue stream.
This notion drove April’s weakening in activity, as new business orders were slashed across the board.
China’s non-manufacturing activity also disappointed in April, with the non-manufacturing PMI rising 50.4 against expectations for a print of 50.6. The reading also fell from 50.8 in the prior month.
This brought China’s composite PMI down to 50.2 in April from 51.4 in March, with the print now barely remaining in expansion territory.
Wednesday’s PMI reading highlights the impact of steep U.S. tariffs on China’s manufacturing powerhouses, as they are cut off from American markets. But the country has so far shown little intent in trade talks with the U.S., having recently denied Trump’s claims that negotiations were taking place.
