China's manufacturing sector continues to see evidence of expansion in terms of production activities and market demand, with the purchasing managers' index (PMI) coming in at 51.9 in March, data from the National Bureau of Statistics (NBS) showed Friday.

This came above the expectations of 51.5, according to economists in a Reuters poll. A reading above 50 indicates expansion, while a reading below it reflects contraction.

"With the accelerated recovery of the domestic economic circulation, manufacturing production and market demand have steadily rebounded," said Zhao Qinghe, a senior NBS statistician, highlighting the standout performance of the production index and new order index.

The inventory of major raw materials in the manufacturing industry further declined in March, while the purchase volume index rose to the highest since December 2020. These indicate that companies are more willing to purchase, produce and destock, said Pang Ming, chief economist and head of research for Greater China at JLL, in a note to CGTN.

China's non-manufacturing PMI rose to 58.2 in March, the highest since May 2011, as policies in boosting consumption play out, NBS data showed.

These major indexes have been in expansion territory for three consecutive months, which reflects the economic development is stabilizing and recovering, said Zhao.

The service industry business activity index rose to 56.9 in March, suggesting pent-up demand for in-person services remains elevated, said Lu Ting, Nomura's chief China economist, in a note.

"We expect growth momentum in tourism, hospitality and entertainment sectors to sustain through the Tomb-Sweeping Day, also known as the Qingming Festival (April 5)," Lu added.

However, Zhao of NBS also said it was worth noting despite the continued economic recovery, challenges including weak demand, tight capital availability and high operating costs, remain.

He added that the foundation of China's economic recovery needs to be further consolidated.