China's PMI rebounds as economy continues expansion

China's manufacturing and service sectors registered faster growth in their business activities in March, as production and demand increased following the Spring Festival holiday, according to data released on March 31.

The purchasing managers' index (PMI) for China's manufacturing sector came in at 51.9 in March, edging up from 50.6 in February, data from the National Bureau of Statistics (NBS) showed.

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

Commenting on the rise, NBS senior statistician Zhao Qinghe said the accelerated recovery of factory activity after the Spring Festival holiday led to the boom in the manufacturing sector, adding that 17 out of the 21 subsectors tracked by the bureau saw their PMI remain in the expansion zone in March.

Domestic demand continued to recover, driven by increased consumption during the Spring Festival holiday and the faster growth of investment as the weather becomes warmer, according to Wen Bin, a chief analyst at China Minsheng Bank.

The sub-index for production stood at 53.9 in March, up 2 percentage points from a month earlier, while that for new orders rose 2.1 percentage points to 53.6, which indicates faster expansion of production and demand in the sector.

Wen noted that the recovery of manufacturing production sped up, driven by the rebound in demand, as well as the early resumption of work after the Spring Festival holiday, as many people chose to stay put during the holiday to reduce the risk of COVID-19 infection.

Exports and imports in the manufacturing industry returned to the expansion zone in March, with the new export order and import sub-indexes hitting 51.2 and 51.1, respectively, up from 48.8 and 49.6 in February.

Zhao attributed the rebound to the faster increase in production and demand, as well as the continued recovery of major economies around the world.

NBS data also pointed to better performance by enterprises of all sizes. Big companies continued their expansion, with the sub-index measuring their activity up 0.5 percentage points from February to 52.7, while medium- and small-size companies saw their PMI back to the expansion zone at 51.6 and 50.4, respectively.

New growth drivers continued to play a leading role in the development of the manufacturing sector, with the sub-indexes for high-tech manufacturing and equipment manufacturing standing at 53.9 and 52.9, respectively, 2 percentage points and 1 percentage point higher than the overall PMI of the manufacturing sector.

Data released on March 31 also showed that the PMI for China's non-manufacturing sector came in at 56.3 in March, up from 51.4 in February.

The sub-index for business activities in the service sector stood at 55.2, up from 50.8 in February, which reflects a faster recovery in the service sector, as epidemic control efforts paid off and consumption demand continued to increase, said Zhao.

In breakdown, the sub-indexes for business activities in railway and air transportation, telecommunications and satellite transmission, as well as financial services, came in at above 60, indicating rapid growth of business volume in these areas.

The Chinese economy continues to show a recovery trend, with the PMI remaining in expansionary territory for 13 consecutive months, said Zhang Liqun, a researcher with the Development Research Center of the State Council.

The faster PMI recovery this month indicates a continued expansion of China's economy, with supply and demand picking up steam simultaneously, the performance of businesses recovering and the service sector booming, Wen said.

In the first quarter of the year, the entrepreneur macroeconomic heat index stood at 38.9 percent, up 4.5 percentage points from the previous quarter and 26.5 percentage points higher from the same period last year, said a report from the People's Bank of China.

Wen also called for more efforts to strengthen targeted support for manufacturing, medium- and small-size enterprises, technological innovation and the expansion of domestic demand to further consolidate the foundation of recovery.