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China’s Manufacturing Industry Continues to Deteriorate

When it’s deliver-or-die, supply chains become the lifeblood of a company. To that end, the fashion industry has embraced technology to navigate today’s hyper-complicated supply chain, with myriad solutions shaping the first, middle and last mile. Call it Sourcing 2.0.

Chinese factories reported their strongest drop in activity in a year as new orders fell in April for the second month in a row. Production levels also stagnated while jobs cuts increased, according to new data released Monday.

The HSBC/Markit Purchasing Managers’ Index (PMI), which surveyed China’s small- and medium-sized firms to offer a snapshot of the manufacturing industry, fell to a final reading of 48.9 last month from 49.6 in March, signaling the need for new stimulus measures such as lower interest rates to stop a slowdown in the world’s second-largest economy.

“Fewer new orders appeared to stem from weaker domestic demand,” said Annabel Fiddes, an economist at Markit, in a press release, noting that while new export work increased at a marginal rate over the month, “further job cuts and reduced purchasing activity suggest that the sector may struggle to expand in the near-term.”

China’s economy grew at its slowest rate in 24 years in 2014, the National Bureau of Statistics reported, and despite the People’s Bank of China cutting interest rates twice since November, the downshift hasn’t showed any signs of stopping this year. Some analysts blamed sluggish production levels in March on the late timing of 2015’s Lunar New Year holiday, but April’s figures indicate that’s not the case.

Furthermore, a recent survey conducted by the U.S.-China Business Council (USBS) found that more American clothing companies are less optimistic about opportunities in China, with 14 percent of respondents reducing their presence in the country due to better business prospects elsewhere, among other reasons.

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