Factory activity in China slowed in April as a global shortage of shipping containers hindered the movement of goods, official data showed Friday, but wider demand remained robust as the domestic economy rebounds from the coronavirus pandemic.

The Purchasing Managers' Index (PMI), a key gauge of manufacturing activity, came in at 51.1 this month -- lower than in March but still above the 50-point mark separating growth from contraction, according to the National Bureau of Statistics.

But challenges remained, with some companies reporting problems "such as chip shortages, blockages in international logistics, a lack of containers, and rising freight rates", said NBS senior statistician Zhao Qinghe in a statement.

This has affected the delivery time of suppliers in high-tech manufacturing, particularly in the past three months, while the procurement cycle of raw materials has become longer, weighing on production.

World trade is being slowed by a shortage of containers because of skewed demand during the pandemic, which has seized up the highly coordinated flow of goods around the world.

The lack of containers has pushed the price of cargo up, with a knock-on for factory activity.

But overall the picture is positive for China's manufacturers.

Import and export indexes expanded for two straight months, "reflecting the continued growth of manufacturing businesses involved in foreign trade", said Zhao.

The outlook for smaller businesses is better, with production and indicators for new orders going up, suggesting their "operations are improving".

The overall trend is in line with analysts' expectations, with a recent Capital Economics report expecting manufacturing PMI to point to continued strength "on the back of still buoyant foreign demand".

The report added that recovery would likely be seen in the service sector as well, after it was derailed earlier this year by domestic travel restrictions imposed during the Lunar New Year break to prevent further outbreaks.

On Friday, official data showed the non-manufacturing PMI fell to 54.9, down from 56.3 in March, with activity in the construction sector easing although the service industry continued its recovery.

"Driven by factors such as the Qing Ming holiday and continued improvement of epidemic prevention and control, the services industry consumer market has rebounded further," Zhao said.

Equities in Asia and Europe lifted by upbeat Fed, strong results
Hong Kong (AFP) April 29, 2021 - Asian and European markets rallied Thursday as traders welcomed blockbuster earnings from Wall Street titans and after the Federal Reserve painted a rosy picture of the US economic outlook, repeating a pledge to stick to its guns with an ultra-low monetary policy.

Traders were also keeping an eye on President Joe Biden's first address to Congress as he laid out another huge spending plan aimed at helping American families and paid for with taxes on the wealthy.

After a shaky couple of weeks on trading floors, equities appear to be finding their feet again and getting ready to push to new highs as vaccines are rolled out, lockdowns eased and economies get back on track.

And while there have been fears the expected surge in activity in this year could fan inflation and force central banks to step back from their loose monetary policies, the Fed said Wednesday it was ready to stay the course.

After its latest meeting the bank upgraded its outlook for the world's top economy, while its boss Jerome Powell said that the expected spike in inflation will be temporary owing to last year's low base of comparison and is not likely to need policy action.

"An episode of one-time price increases as the economy reopens is not the same thing as, and is not likely to lead to, persistently higher year-over-year inflation," he said in response to a question from AFP.

He also said it was not yet time to start talking about tapering its vast bond-buying programme that has pumped trillions into the financial system.

"The Fed's outcome-based guidance and triple-down bet on not talking about tapering should provide an easy playbook leading up to the June 16th (policy) meeting," said OANDA's Edward Moya.

"The US will need to see a couple of blowout nonfarm payroll reports, herd immunity reached before the June meeting, and inflation above 3.5 percent for the Fed to be willing to start talking about tapering."

And markets strategist Louis Navellier added: "One observation about why the Fed is maintaining such a high level of conviction that inflation will not be long lasting is that the global reopening is not a synchronous economic event.

"China, the US, and parts of Europe are experiencing late-stage pandemic growth, but this is not happening in several key developing and emerging markets, where Covid-19 data is surging, and their economies are still suffering."

- 'Ready for takeoff' -

However, Michael Hewson at CMC Markets said: "To sum up, the Fed appears to be on autopilot through the summer, however if the data continues to surprise to the upside the market will probably front run it anyway."

While US markets struggled to lift off, with all three main indexes ending down, Asia was well in the green, with Hong Kong, Sydney and Singapore leading the way. Shanghai, Wellington and Jakarta were also up, though Seoul dipped and Taipei was flat. Tokyo was closed for a holiday.

London and Paris were well up in the morning though Frankfurt was flat.

The upbeat mood was helped by forecast-beating earnings reports from Apple and Facebook, two of Wall Street's biggest hitters, who essentially saw their profits double in the first quarter.

That came after a similar strong release by Google.

The three companies, along with Amazon, are among tech titans that have thrived as the pandemic accelerated a shift to working, learning, shopping and socialising online.

South Korean giant Samsung also said Thursday it saw net profit jump by almost half in the first three months.

In Washington, Biden hailed the US vaccination drive and its recovery from the pandemic, telling a joint session of Congress: "America is ready for takeoff."

He also laid out his $1.8 trillion American Families Plan to pour money into early education, childcare and higher education -- all paid for by letting the top rate of income tax rate return to the pre-Donald Trump level around 37 percent.

Americans earning less than $400,000 a year, however, would face no extra taxes, he said.

The spending splurge follows a $1.9 trillion stimulus and comes as a $2.2 trillion infrastructure proposal is being debated by lawmakers.

And while the higher rate of tax is unlikely to please Wall Street, analysts have said traders were likely to be willing to overlook it for now as they concentrate on the economic recovery drive.

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European Parliament backs US global minimum tax proposal
Brussels (AFP) April 29, 2021
The European Parliament on Thursday welcomed a US proposal to introduce a 21 percent global minimum tax on corporations but said Europe should "go it alone" if the effort fails. "Outdated international tax rules need to be overhauled, including a minimum effective corporate tax rate," a statement said after the non-binding resolution was passed with a big majority. The US proposal is intended to stop what Washington calls a "race to the bottom" among countries to see who can offer the lowest rat ... read more