China’s manufacturing sector barely expanded in April due to poor domestic and export demand, increasing the likeliness of a further stimulus to support its lethargic economy.
The manufacturing sector continues to decline as requests for new orders have fallen due to an overcapacity in production.
China’s official Purchasing Managers’ Index (PMI) stood at 50.1 in April slightly exceeding the 50-point benchmark which separates the growth from contraction on a monthly basis.
In terms of the service sector, the PMI dropped to 53.4 in April from 53.7 in March.
The downward pressure in China’s economy is continuing to reflect negatively on future forecasts. The country’s economy has declined to 6.8 percent in 2015 from 7.4 percent in 2014. Resulting in the slowest growth since 1990.
Confirming that the economy is still struggling to maintain momentum, new export orders contracted further to 48.1 from 48.3 percent in March while foreign and domestic demand was unchanged at 50.2 percent in April from March.
Growing concerns put pressure on Chinese government to further develop policy stimulus.
In response to the unpleasant results, the country's elite Politburo said on Thursday that authorities will step up policy "adjustments" and should cut taxes further. It also said the government must resolve financing glitches which are holding up big infrastructure projects.
In addition, China's cabinet unveiled new measures on Friday to boost employment, offering more flexible tax breaks to companies to hire and preferential loans to business starters.
Also, Beijing aims to create at least 10 million new jobs in 2015 and keep the urban jobless rate below 4.5 percent.