For the first time in nine months, China’s manufacturing activity rebounded last month amidst painful structural reforms to halt the slowdown in the world’s second largest economy.
The purchasing managers’ index (PMI) came in at 50.2 in March, up from February’s 49, data released today by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing said.
A reading above 50 indicates expansion, while a reading below 50 reflects contraction.
The new data suggests positive momentum of the reforms being implemented to halt the slowdown.
Manufacturing
China, the world’s biggest steel and coal producer, in January announced cut in excess capacity by a whopping 100 to 150 million tonnes in the two key sectors.
China’s production of crude steel fell 2.3 per cent to 804 million tonnes in 2015, the first time the industry reported negative growth in 34 years.
Some 1.8 million employees in the coal sector will be relocated while 360 million tonnes of outdated production capacity will be removed.
Chinese economy slipped to 6.9 per cent last year, slowest in over two and half decades while the government fixed 6.5 to 7 per cent as GDP target for this year.
NBS statistician Zhao Qinghe attributed the rebound to the government’s pro-growth measures, as well as the rising demand of manufacturing imports and exports.
The price rebound of major international commodities spurred purchases. Technology upgrades also contributed to improvement of manufacturing sectors, said Zhao.
The sub-index measuring production stood at 52.3, up 2.1 points from a month earlier, with that for new orders settling at 51.4, up 2. 8 points.
The sub-index for imports came in at 50.1, up 4.3 points from February, the highest reading since December, 2013.
Also the business activity in China’s non-manufacturing sector expanded in March, reversing a downward trend since December.
Purchasing Managers’ Index
The purchasing managers’ index (PMI) for the non-manufacturing sector stood at 53.8 in March, up from 52.7 in February and well above the 50 mark that separates expansion and contraction, according to a report released jointly by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing.
The non-manufacturing PMI tracks business activities of both the service sector and the construction industry.
The service sector sub-index was 53.1 in March, up 0.9 points from February, said the report.
The sub-index for service new orders picked up 2 points from one month earlier to 50.8 in March, suggesting improving demand in the non-manufacturing sector, NBS statistician Zhao Qinghe said.
The sub-index for construction activity rose 2.8 points to 58 in March, while that for new orders up 2.4 points to 50.5 due to strong demand.
Businesses related to retail, post, catering, real estate, brokerage and insurance posted sound growth in March.
However, the employment sub-index was 48.2, a decrease of 0.7 points from the previous month, indicating the employment at non-manufacturing enterprises continued to decrease, state-run Xinhua news agency reported.