Full Breakdown
China’s April Factory Activity Holds Steady Amid Iran War Shock
5/2/2026, 4:52:17 AM
PMI Snapshot
Official manufacturing PMI rose to 50.3 in April, staying above the 50-point growth line; composite PMI fell to 50.1 and non-manufacturing PMI to 49.4. A private RatingDog/S&P survey posted a General Manufacturing PMI of 52.2.
Context
The Iran war has lifted oil prices and disrupted shipping, yet Chinese factories report no oil shortage. A U.S.–China trade truce, sealed after a 2023 Busan meeting between President Donald Trump and President Xi Jinping, kept tariffs near 47 % and suspended rare-earth controls. A May summit in Beijing will address remaining tariff issues.
Data Highlights
New-orders fell to 50.6 (from 51.6). New-export-orders rose to 50.3, the strongest since April 2024. Raw-material price index held at 63.7; output-price index slipped to 55.1. Q1 GDP grew 5 % YoY, meeting the 4.5-5 % target. Trade surplus hit $1.2 trillion in 2025; unemployment rose and retail sales lagged.
On-the-Ground View
Han Bing, a Dongguan warehouse manager, said business was “booming” as factories stockpiled supplies. He warned that “although China is not short of oil, there is an overall shortage in the chemical sector, and factories are nervous about future demand.”
Official Summaries
NBS statistician Huo Lihui said manufacturing “maintained expansion” while services “showed weakness.” Pinpoint economist Zhiwei Zhang highlighted export resilience amid weak domestic demand. Leah Fahy of Capital Economics noted higher oil prices have not yet weighed on industrial activity. China pledged to “enhance energy and resource security and systematically respond to external shocks.”
Criticism & Concerns
Julian Evans-Pritchard warned that momentum may be “entirely thanks to exports, with domestic demand growth coming under pressure again.” Analysts also flagged rising unemployment, weak retail sales and that sustained high energy prices could squeeze petrochemical margins.
Conflicting Indicators
The official PMI of 50.3 differs from the private 52.2 reading, reflecting coverage of state-owned versus export-oriented firms. While new-export-orders rose to 50.3, raw-material stockpiles stayed in contraction, creating mixed signals.
Verbatim Quotes
- “Industry still looks comparatively firm, while services and domestic demand show some weakness, which keeps boosting internal demand high on the policy agenda,” — Hao Zhou, chief economist, Guotai Junan International Holdings
- “The PMI index shows the manufacturing sector has not been adversely affected by the conflict in the Middle East. The new export order index actually rose above 50 the first time in two years,” — Zhiwei Zhang, president and chief economist, Pinpoint Asset Management
- “In China, the higher oil prices have not impacted the industrial activity.” — Leah Fahy, senior China economist, Capital Economics
- “Although China is not short of oil, there is an overall shortage in the chemical sector, and factories are nervous about future demand,” — Han Bing, warehouse manager, Dongguan
Outlook
The May Beijing summit between President Trump and President Xi will address tariff clarity and energy security. Observers will watch whether trade truce endures if oil prices stay high.
