China's factory activity expanded last month after shrinking for five straight months, posting its strongest showing in a year, according to a new report.
The official manufacturing Purchasing Managers Index (PMI) for March was 50.8, up 1.7 points from February's PMI, China's National Bureau of Statistics announced Sunday. That figure exceeds the median prediction of 50.1 given by economists polled by Bloomberg and is the highest since March 2023.
The report signals stabilizing growth in some sectors, even as the world's second-largest economy continues to be weighed down by a property market crisis, low consumer confidence, deflationary pressures, and high youth unemployment.
The PMI functions as a snapshot of economic trends in the manufacturing sector. It is a composite index calculated from scores in five categories weighted at 20 percent each: production, new orders, supplier delivery times, inventories, and employment.
These five subindices are based on industry supply chain managers' responses in monthly surveys. A PMI reading of over 50, known as the critical point, indicates industry expansion since the previous month, while 49 and lower indicates contraction.
China's manufacturing activity showed life after the end of the long Lunar New Year holiday. Additionally, 15 of the 21 industries surveyed hit the important 50 percent mark, up from just five in February, National Bureau of Statistics statistician Zhao Qinghe wrote in an analysis.
Zhao pointed out that small, medium-sized and large enterprises were all now in the expansion range.
A separate PMI survey published by Caixin reported an even higher headline PMI of 51.1 for March on the heels of its 50.9 reading in February.
Newsweek reached out to the Chinese Foreign Ministry via email for comment.
Production
The index production levels rebounded 2.4 points to 52.2 percent last month, the report shows, with industries including wood processing and furniture, railways, ships, aerospace equipment, computers and electronic equipment reporting an even more impressive 55 percent.
New orders
The new orders index saw the most movement. It jumped 4 points from February to hit 53 percent, suggesting a resurgent market demand in the manufacturing industry.
Supplier delivery times
This index was 50.6, up 1.8 points from February, showing reduced supplier delivery times.
These "were shortened due to a quick recovery in logistics, which had been affected by poor weather conditions in some regions, bringing the corresponding gauge back to expansion," Caixin Insight Group senior economist Wang Zhe said in the report on Caixin's independent PMI report.
Inventories
The inventory levels index was 48.1 percent, signifying relatively high demand for raw materials.
Employment
Employment fell again in March (48.1), though less rapidly than in February (47.5).
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Micah McCartney is a reporter for Newsweek based in Taipei, Taiwan. He covers U.S.-China relations, East Asian and Southeast Asian ... Read more
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