(Yicai) April 30 -- Activity in China’s manufacturing sector increased for a second month in a row in April, though the pace of expansion slowed from a 12-month high the month before.

The manufacturing purchasing managers' index dipped to 50.3 last month from 50.4 in March, according to data released today by the National Bureau of Statistics and the China Federation of Logistics & Purchasing. A reading above 50 indicates expansion.

The manufacturing sector maintained a generally stable and positive operational trend last month, said Huo Lihui, a chief statistician at the NBS.

The uptick began in March as businesses got back to work after the Lunar New Year holiday and policy support continued to work its way through the economy. Confidence was also bolstered by March’s “Two Sessions,” China’s key annual policy meetings, and first-quarter economic growth came in at 5 percent, up from 4.5 percent in the prior three months.

The modest slowdown in April’s PMI shows that the economy is still in a recovery phase but lacks momentum, said Zhang Liqun, special analyst at the China Federation of Logistics & Purchasing. He noted the need to guard against weakening demand and to continue efforts to boost domestic consumption.

Production edged up to 51.5 from 51.4, marking the second straight month above 51 while the purchasing volume rose to 51.1 from 50.9. Production in both the equipment and high-tech manufacturing sectors saw notable increases.

On the demand side, new orders dipped to 50.6 from 49.6, but remained above the boom-bust line. New export orders climbed to 50.3 from 49.1, returning to positive territory after staying under 50 for 23 consecutive months.

Ongoing uncertainty in the Middle East and swings in international commodity prices kept the purchasing price sub-index, a measure of input costs, at 63.7 and the factory gate price sub-index, a gauge of output costs, at 55.1, both of which are relatively high levels in recent years.

The sharp price rises of the past two months are much higher than those seen in the past four years, said Wen Tao, an expert at the China Logistics Information Center. External factors, such as the situation in the Middle East, should be closely watched, he added.

The non-manufacturing PMI, which includes construction and services, fell into negative territory, dropping to 49.4 from 50.1, the NBS data also showed. The composite PMI output index, which combines the manufacturing PMI’s production sub-index and the non-manufacturing PMI, slid to 50.1 from 50.5.

Business activity in the services sector declined to 49.6 from 50.2, while activity in the 48  industry slumped to 48 from 49.3. However, the three-day Qingming Festival holiday boosted activity in industries such as railroad transportation, hospitality, and cultural and recreational activities, driving their indexes above 55.

With the arrival of the peak construction season and the Labor Day holiday next month, activity in investment and consumption-related sectors is expected to pick up further, according to He Hui, vice president of the China Federation of Logistics & Purchasing.

Editor: Kim Taylor