China factories improve slightly

HSBC's flash purchasing managers' index (PMI) for the Chinese manufacturing industry had risen to 48.3 points in April from 48.0 points in March, the London-based banking giant announced Wednesday.

The April reading was a mild improvement, the bank said, but it had remained below 50 points, which separated contraction from expansion in factory output.

“Domestic demand showed mild improvement and deflationary pressures eased,” HSBC economist Qu Hongbin said in a statement.

HSBC's PMI index is a widely watched gauge of the health of the Chinese economy, and in April was compiled from responses of about 420 purchasing managers in China. The Chinese economy - a main driver of global economic growth - weakened for a second consecutive quarter between January and March. Growth slumped to 7.4 percent in the quarter, after 7.7 percent and 7.8 percent respectively in the final quarters of 2013.

The government in Beijing has taken a series of smaller measures to help stem the slide, including tax breaks for companies and bigger infrastructure spending. Moreover, the country's central bank has lowered capital reserve requirements for rural banks to stimulate the economy.

The PMI survey also showed, however, that new export orders for Chinese manufacturers slipped back below the 50-point mark after a rise in March. In addition, employment decreased at a faster rate. HSBC's Qu Hongbin noted that this showed downside risks were still evident in China.

uhe/hc (Reuters, AFP, AP)