China experienced its most robust factory activity expansion in over a year in March, as revealed by a private survey on Monday, signaling a stabilization in the growth trajectory of the world’s second-largest economy.
The Caixin/S&P Global China Manufacturing Purchasing Managers’ Index (PMI) reached 51.1 in March, marking its highest level since February 2023, following a February reading of 50.9. Economists, according to a Reuters poll, had anticipated a reading of 51. The 50-point threshold distinguishes between expansion and contraction.
This data supports another official survey indicating manufacturing activity exceeding market expectations, marking its strongest performance in 11 months. Additionally, the official survey for non-manufacturing activity in China recorded its most robust reading since June, reinforcing recent encouraging export and retail sales data.
Wang Zhe, a senior economist at Caixin Insight Group, commented on the survey release, stating, “Overall, the manufacturing sector continued to improve in March, with expansion in supply and demand accelerating, and overseas demand picking up.”
On Sunday, China’s National Bureau of Statistics released survey data showing the country’s official Manufacturing PMI at 50.8 in March, its strongest reading since March last year, surpassing expectations of 49.9 in a Reuters poll.
These surveys serve as the primary economic indicators each month, providing insights into the state of the Chinese economy.
China has set a growth target of “around 5%” for 2024, while establishing a deficit-to-GDP ratio of 3% for the year and reaffirming a commitment to doubling down on “high-quality growth” and manufacturing.
Given the elevated base of 2023 data, several economists have cautioned that Beijing may need to resort to more substantial stimulus measures to achieve its 2024 growth objectives.
Some lingering concerns arise from the latest data, particularly regarding prices. China’s producer prices have been declining for well over a year, while consumer prices have dropped in four of the last five months.
“Manufacturers increased purchases and raw material inventories amid continued improvement in business optimism. However, employment remained in contraction, and a depressed price level worsened,” commented Wang from Caixin.
“Prices remained low. A decline in raw material prices reduced production costs for manufacturers, providing them with leeway to lower prices amid fierce market competition. Both gauges for input costs and output prices reached new lows since July 2023,” Wang added.
The news was reported by Clement Tan and published on CNBC. You can review the article at the following link: China’s factory activity in March expands at its fastest pace in more than a year.
