Most active (July) U.S. futures 3.9075 down 0.0265 (-0.67%)
From Reuters via Mining.com, May 1:
The surprise contraction in China’s manufacturing index in April, coming after first quarter growth exceeded expectations, underlines the uneven nature of the recovery in the world’s second-biggest economy.
This variable economic story is likely to be mirrored in China’s imports of major commodities, with strength in some areas being offset by more modest demand in others.
The official manufacturing Purchasing Managers’ Index (PMI) dropped to 49.2 in April from 51.9 in March, slipping below the 50-level that demarcates expansion from contraction for the first time since December.
The PMI was also below market expectations for a positive outcome of 51.4.
Among the components of the PMI showing weakness were new export orders, with this sub-index declining to 47.6 in April from 50.4 in March.
Manufacturing is one of the key pillars of China’s economy from a commodity demand perspective, the others being construction and infrastructure.
The news here is somewhat mixed, with infrastructure investment rising 8.8% year-on-year in the first quarter, outpacing a 5.1 rise in overall fixed-asset investment, while property investment fell 5.8%.
The overall picture for the steel and copper intensive sectors is cloudy, with some areas of strength, but others still struggling to regain momentum after losing steam during China’s strict zero-Covid period, which ended in December.
If manufacturing, construction and infrastructure are uneven, what is the source of the strength in China’s economy, given that first quarter growth exceeded expectations?
Gross domestic product rose 4.5% in the first quarter, beating market forecasts for a 4.0% gain, but much of the outperformance was driven by retail spending, which isn’t especially supportive of steel and copper demand....
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