Chinese factory activity expanded in March after five straight months of contraction, as businesses reported a recovery in production and demand and expressed optimism about business prospects.
The National Bureau of Statistics (NBS) said on Sunday that the purchasing managers’ index (PMI) for China’s manufacturing sector was 50.8 in March, after returning to expansionary territory from 49.1 in February.
Zhang Liqun, a specialist analyst at the China Federation of Logistics and Purchasing, said that the sharp rebound in the PMI reflects the impact of seasonal factors and the pace of overall macroeconomic recovery. Zhang also said that some policies aimed at stabilizing growth and improving market confidence were gradually implemented this year.
Of the 21 industries surveyed, 15 were in expansion areas in March, up 10 times from the previous month, as businesses ramped up production after the Spring Festival holiday.
In the manufacturing sector, a sub-index for manufacturing rose to 52.2 from 49.8 in March, while the sub-index measuring the number of new orders rose to 53 from 49, reflecting a strong recovery in output and demand.
Market activity increased significantly as companies resumed work and production after the Chinese New Year holiday. Zhao Qinghe, a senior statistician at NBS, said efforts to improve equipment have given life to the market, but policies and measures need to be more detailed.
Growth in exports and imports is a bright spot for the manufacturing sector. Companies in the chemical fiber, automotive and communication equipment sectors, and foreign trade companies reported an increase compared to the previous month.
Companies of all sizes saw an increase in production and business this month. small businesses saw their PMI return above the buoyant line for the first time in 12 months, while the PMI for large businesses rose to 51.1 from 50.4.
Noting that all companies of various sizes were in the top 50 in the PMI, Sai Jin, vice president of the China Federation of Logistics and Purchasing, said it showed that the coordination of China’s economic growth is getting stronger.
Business prospects continue to improve, and companies in a range of industries are encouraged by the latest developments.
Data on Sunday showed that non-manufacturing employment, particularly in the services and construction sectors, continued to pick up pace, with the PMI reaching 53 in March and 51.4 in February.
Experts point to a rebound in the PMI, along with improvements in other key economic indicators, as the Chinese economy continues its steady recovery as market expectations improve and growth picks up.
However, they warn that there are some major challenges facing the company’s production and operations, such as increasing market competition and lack of demand.
Zhao called for the promotion of policies such as large-scale equipment modernization and trade in consumer goods to greatly support the growth of China’s manufacturing industry.
The PMI for the non-manufacturing sector came in at 53.0 in March, showing further expansion and contributing to the PMI of 52.7.
The service and construction sectors are expanding with positive market expectations. In particular, postal services, telecommunications, and money and financial services grew rapidly, with an average activity score of 60 points or higher.
