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Manufacturing records March boost
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ACTIVITY in China’s manufacturing sector expanded for the first time in eight months in March, raising hopes that the economy is stabilizing.
The official Purchasing Managers’ Index, which reflects operational conditions in largely state-owned manufacturing companies, rose 1.2 points month on month to 50.2, the National Bureau of Statistics and the China Federation of Logistics and Purchasing said yesterday.
The monthly reading was the first to break the 50-point mark — the demarcation line between contraction and expansion — since August.
Zhao Qinghe, an analyst at the bureau, said that the restart of factory production after the Spring Festival holiday, a warming of trade conditions, rebound in commodity prices, an upgrade of manufacturing capacity and increased investment all contributed to the upturn.
Among the PMI’s component indexes, production rose 2.1 points month on month in March to 52.3, while new orders gained 2.8 points to 51.4, surpassing the 50 mark for the first time in three months.
The employment sub-index, meanwhile, fell 0.7 points to 48.2, its lowest level since May 2015.
“Positive changes are taking place,” Zhao said.
“The rebound was driven partly by seasonal factors, but we should also note that companies still have many difficulties in production and operations.
“More than 40 percent of firms complained of funding pressures, lack of demand and rising labor costs,” he said.
The price of raw materials rose 5.1 points in March to 55.3, the first time it had been over 50 for two consecutive months since August 2014.
Australia & New Zealand Banking Group said in a report published yesterday that the March PMI figure beat market expectations of 49.4 points and pointed to stabilization in manufacturing demand.
“The data suggest China can achieve GDP growth of 6.5 percent in the first quarter. Growth momentum has not declined significantly,” it said.
To help stave off deflationary pressures, the central bank’s monetary policy is likely to remain accommodative, it said.
Meanwhile, the official non-manufacturing PMI for March — a corresponding gauge for activity in the service sector — rose by 1 point month on month to 53.8.
Also released yesterday, the Caixin China PMI, an indicator slanted toward private and export-oriented manufacturing companies, rose 1.7 points in March to 49.7. The index is compiled by Caixin magazine and research firm Markit.
Both input and output prices rose above 50 for the first time since July 2014, it said.
He Fan, chief economist at Caixin Insight Group, said: “All categories of the index showed improvement over the previous month. However, considering that conditions remain uncertain, the government needs to continue with moderate stimulus measures to reinforce market confidence.”
China’s gross domestic product grew 6.8 percent in the fourth quarter of last year, for a full-year figure of 6.9 percent.
On Wednesday, the Asian Development Bank revised down its forecast for China’s 2016 economic growth to 6.5 percent due to weak external demand and slowing investment.
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