China's factory activity
expanded at a faster pace in March as factories ramped up production
after the Spring Festival holiday, while upbeat export orders provided a
further boost.
The purchasing managers' index
(PMI) for China's manufacturing sector came in at 51.9 in March, up from
50.6 in February, the National Bureau of Statistics (NBS) said on
Wednesday.
The data beat an estimate of
51.2, the median forecast of 30 economists polled by Reuters. A reading
above 50 indicates expansion in activity, while a reading below reflects
contraction.
The import index edged up to a
multi-year high, said Zhao Qinghe, a senior NBS statistician who
attributed the growth to expanding domestic demand and production after
the Spring Festival holiday, along with the continuing economic recovery
from the COVID-19 shock around the world.
The export order index and
import index rose to 51.2 percent and 51.1 percent respectively, 2.4 and
1.5 percentage points higher than February, NBS data showed.
The trade increase is partly
driven by recovering demand from the U.S. as the impact of the $1.9
trillion stimulus package started to kick in and the vaccination program
progressed faster than expected, said Wang Dan, chief economist at Hang
Seng Bank China. "Much of the U.S. consumer demand has turned into
orders for China, through both traditional factories channels and
cross-border e-commerce," she said.
The sub-index of production and
new orders rose to 53.9 percent and 53.6 percent respectively,
indicating an acceleration in enterprises' production and purchasing
demand.
Zhao also referred to the
increase in the cost of raw materials like oil and coal in propping up
the factory gate prices.
"Some surveyed firms cited the
resurgent COVID-19 infections abroad and logistics jams among factors
that lead to inadequate imports of several raw materials, and caused
significant increase in price and prolonged delivery time frames," said
Zhao.
Manufacturing employment has
risen 2 percentage points to 51, the first increase since last May,
indicating a warming up in the labor market.
However, Wang cautioned that the
increase was concentrated in large producers, adding that employment at
mid- and small-sized enterprises continued to shrink.
Of all sectors, construction
activities saw the strongest rebound, due to warmer weather and
normalization in production after the Spring Festival holiday. "We
anticipate this trend will continue with the pan out of
government-backed infrastructure building and affordable housing
projects," Wang said.
Service sector growth surges
Growth in China's service sector
expanded at a much faster pace in March. The official non-manufacturing
PMI surged to 56.3 in March, far exceeding market anticipation. Nomura
economists expected a modest rise to 52 from 51.4 last month.
China's service sector had
lagged in recovery compared to manufacturing, but in March it began to
catch up.
The hike shows that as the
pandemic prevention measures' outcome play out, people's pent-up demand
continues to be released and the service sector's recovery has been
boosted, Zhao said.
"We expect services to recover
faster in the rest of the year since business and traveling activities
are normalized and vaccination has picked up pace," Wang predicted.
Within the service sector,
railway and air transportation, internet software and information
technology services, and monetary and financial services industries saw
the biggest business increase, with PMI above 60.
The accommodation and rental
industries, which were hit harder by the pandemic, have also returned to
the growth zone.
The official composite PMI,
which includes both manufacturing and services activity, rose to 55.3
from February's 51.6.
"We expect both the
manufacturing and non-manufacturing PMIs to moderate in April," wrote Lu
Ting, chief China economist at Nomura, in a note to CGTN.
However, he cautioned on the
inflation pressure on producer prices, which resulted from raising
global commodity prices and domestic anti-pollution measures implemented
in north China.
Source: CGTN |