China’s factory activity expands at 13-month high rate in March: PMI survey

China's factory activity grew at a 13-month high rate in March on the back of new orders, according to a private survey released on Monday, April 1.

The survey also showed that the business confidence index also rose to an 11-month high, reflecting the Chinese economy is stabilising.

The Caixin/S&P Global Manufacturing PMI (purchasing managers’ index) increased to 51.1 in March against 50.9 in February. The March numbers also beat analysts’ projections of 51.0 for the month.

Chinese factory activity continued to expand in March as supply and demand accelerated and an uptick in orders from abroad, the survey showed.

Businesses' confidence for the year ahead also expanded to an 11-month high level as input costs showed a declining trend.

The purchasing managers’ index is a gauge of prevalent economic trends in manufacturing. The index is based on a monthly survey of supply chain managers across industrial sectors which comprise both upstream and downstream activity. A reading above 50 shows expansion in factory or manufacturing activity while a number less than that suggests contraction in the business activity assessed by the PMI.

Official PMI survey shows 1st expansion in Chinese factory activity in five months

The private PMI survey came soon after a survey by China’s National Bureau of Statistics on Sunday showed that the PMI for manufacturing rose to 50.8 in March against 49.1 in February. The March PMI suggested that the factory activity in China turned positive for the first time in five months, as per the official survey.

Growth in new orders from domestic as well as overseas customers helped PMI expansion in March, the private survey showed.

The survey reflects stabilisation in the world’s second-largest economy. Recently, China reported better-than-expected retail sales data as well as export numbers.

China last month projected an ambitious 5% economic growth target for 2024. Global financial services major Citi also raised its 2024 growth forecast for China to 5% from 4.6% earlier on the back of positive macro data and policy delivery.

More stimulus needed to push growth amid uncertainties

However, China needs to implement more stimulus measures to boost economic growth as a slump in the property sector is still dragging the expansion amid prevailing uncertainties and unfavourable factors.

A decline in the costs of raw materials helped lower production costs for manufacturers and created room for bringing down product prices amid cut-throat competition.