China's manufacturing activity expands in March, official PMI shows

China's factory activity expanded in March after five consecutive months of contraction as enterprises reported production and demand recovery and showed optimism in their business outlook.

The purchasing managers' index (PMI) for China's manufacturing sector was 50.8 in March, bouncing back to the expansion zone from 49.1 in February, the National Bureau of Statistics (NBS) said Sunday.

A reading above 50 indicates expansion, while a reading below 50 reflects contraction.

Zhang Liqun, a special analyst with the China Federation of Logistics and Purchasing, said the significant rebound in March PMI reflected both the impact of seasonal factors and the recovery momentum of the overall macro economy. Zhang also highlighted that multiple policies aimed at stabilizing growth and boosting market confidence this year are gradually taking effect.

Among the 21 surveyed sectors, 15 were in the expansion zone in March, up by 10 from the previous month, as enterprises accelerated production after the Spring Festival holiday.

The sub-index for production in the manufacturing sector rose from 49.8 to 52.2 in March, while the sub-index measuring the number of new orders increased from 49 to 53, indicating a robust recovery in both production and demand.

As companies accelerated resuming work and production after the Chinese New Year holiday, market activity has increased significantly. Meanwhile, the efforts for equipment renewal have injected vitality into the market, but the policies and measures need to be further detailed, said senior NBS statistician Zhao Qinghe.

The increase in exports and imports was another bright spot for the manufacturing sector. Companies in the chemical fiber, automobile, and communication device sectors and more reported improving foreign trade businesses compared with a month earlier.

Companies of varying sizes all saw improvements in production and operation this month. Small enterprises saw their PMI return above the boom-and-bust line for the first time in 12 months, while the PMI for large enterprises rose to 51.1 from 50.4.

Noting companies at different sizes all saw their PMI above 50, Cai Jin, vice-president of China Federation of Logistics and Purchasing, said it generally reflects that the coordination of China's economic development is further strengthening.

The business outlook continued to improve, with companies in a variety of sectors are upbeat about recent developments. 

Sunday's data also revealed that non-manufacturing activity, specifically in services and the construction sector, continued the growth momentum in previous months, with its PMI coming in at 53 in March, up from 51.4 in February. 

Experts said that the recovery of PMI, along with the improvements in other crucial economic indicators, reflects that the Chinese economy is continuing to recover steadily, with market expectations improving and growth impetus strengthening.

However, they also cautioned that there are some pressing challenges facing enterprise production and operation, such as increasingly fierce market competition and a lack of demand.

Zhao called for promoting the implementation of policies such as large-scale equipment upgrades and trade-ins of consumer goods to provide solid support for the growth of China's manufacturing sector.

PMI for the non-manufacturing sector came in at 53.0 in March, showing an increasing expansion and contributing to a composite PMI of 52.7.

Both the services and construction sectors expanded alongside positive market expectations. Notably, the postal service, telecommunications, monetary and financial services grew rapidly with the activity indexes averaging 60-points or above.

Cai noted the sound development of both manufacturing and non-manufacturing sectors, saying that the interaction between both industries will promote China's economy to further rebound and improve.

(With input from Xinhua)