The modern city landscape of Shanghai juxtaposed with the Chinese national flag
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China’s industrial activity in March grew at the strongest pace in more than a year, a private survey showed on Monday, signaling a stabilization of growth in the world’s second-largest economy.
The Caixin/S&P Global China manufacturing purchasing managers’ index in China stood at 51.1 in March – the highest reading since February 2023 – after standing at 50.9 in February. Economists had expected the value to reach 51, according to a Reuters poll. The 50 point limit separates expansion from contraction.
This reading confirms another official survey of manufacturing activity which exceeded market expectations and reached its highest in 11 months. China’s official survey of non-manufacturing activity posted the strongest data since June, adding to recent encouraging data on exports and retail sales.
“Overall, the manufacturing sector continued to improve in March, with accelerating supply and demand expansion and a recovery in foreign demand,” Wang Zhe, senior economist at Caixin Insight Group, said in the survey release .
China’s National Bureau of Statistics released survey data on Sunday showing the country’s official manufacturing PMI stood at 50.8 in March, its strongest reading since March last year, which was also higher. strong than expectations of 49.9 in a Reuters poll.
These surveys typically represent the first economic data available each month and provide insights into the state of China’s economy.
China has set a growth target of “around 5%” for 2024, while setting a deficit-to-GDP ratio of 3% for the year and reiterating a plan to double “high-quality growth” and output .
Given the strong data base for 2023, several economists have warned that Beijing may need to turn to more robust stimulus to meet its 2024 growth targets.
Some lingering concerns
The latest data highlights some lingering concerns, particularly around pricing.
Producer prices in China have been falling for over a year now, while consumer prices have fallen in four of the last five months.
“Manufacturers increased purchases and inventories of raw materials amid continued improvement in business optimism. However, employment remained contracting and the depressed price level worsened,” Caixin’s Wang said.
“Prices have remained low. A decline in raw material prices has reduced production costs for manufacturers, giving them leeway to lower prices in an environment of fierce market competition. Both indicators for production costs input and output prices have reached new lows since July 2023,” Wang added.