CHINA’S factories suffered their fastest drop in activity in a year in April as new orders shrank, a private business survey showed yesterday, hardening the case for fresh policy stimulus to halt a slowdown in the world’s second-largest economy.

    The HSBC/Markit Purchasing Managers’ Index (PMI) fell to 48.9 in April — the lowest level since April 2014 — from 49.6 in March, as demand faltered and deflationary pressures persisted.

    The number was weaker than a preliminary reading of 49.2, and below the 50-point level that separates growth from contraction compared with March.

    The overall new orders sub-index dipped to 48.7 in April, the sharpest contraction in a year, although new export orders showed tentative signs of improvement.

    Both input and output prices declined for a ninth month in April while manufacturing employment contracted for an 18th month, auguring poorly for an economy that grew at its weakest rate for six years in the first quarter.

    “China’s manufacturing sector had a weak start to Q2, with total new business declining at the quickest rate in a year while production stagnated,” said Annabel Fiddes, an economist at Markit.

    “The PMI data indicate that more stimulus measures may be required to ensure the economy doesn’t slow from the 7 percent annual growth rate seen in Q1.”

    An official survey released Friday showed China’s factories struggled to grow in April as domestic and export demand remained weak, reinforcing expectations that the government will roll out more measures to support the slowing economy.

    The private survey focuses on small and mid-sized firms while the official one looks more at larger, State-owned companies.

    (SD-Agencies)