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Employees working at an energy-saving materials company in Zibo, eastern China
(Beijing) — China’s manufacturing activity expanded at the fastest pace in 13 months in March, and business confidence rose to an 11-month high, led by an increase in new orders from domestic and international customers, according to a private survey on Monday. Reached.
The Caixin/S&P Global Manufacturing PMI for March was 51.1, up from 50.9 in the previous month and higher than analysts’ expectations of 51.0, marking the fifth consecutive month of increases. The 50 point mark separates growth from contraction.
The upbeat results came after recent export and retail sales data beat expectations, signaling a positive start to the year for the world’s second-largest economy.
Official factory data released on Sunday also moved into positive territory, bringing relief to policymakers even as the crisis in the real estate sector remains a drag on the economy and confidence. The official Purchasing Managers Index (PMI) in March was 50.8, up from 49.1 in February and expanding for the first time in six months.
Last week, Citi raised its 2024 growth forecast for China to 5.0% from 4.6%, citing “recent positive data and policy outcomes.”
Premier Li Qiang announced an ambitious economic growth target of around 5% in 2024 at the annual meeting of China’s parliament in March.
But analysts say further stimulus will need to be rolled out to reach that goal, as policymakers cannot rely on weak statistical bases for 2022 to outpace 2023 growth data. .
Expansion in manufacturing production and new orders accelerated last month, a PMI survey showed. External demand has also recovered, with the index of new export orders reaching its highest level since February 2023.
Business confidence for next year rose to its highest level since April 2023, on positive news such as lower input costs.
“The decline in raw material prices has reduced production costs for manufacturers, creating room for them to lower prices amid fierce market competition,” said Wang Zhe, senior economist at Caixin Insight Group.
However, companies are cautious about adding employees, and related sub-indices have been negative since August last year.
“The economy still faces headwinds with uncertainties and unfavorable factors prevailing,” Wang said.
“Downward pressure on the economy continues, employment remains sluggish, prices remain sluggish, the lack of effective demand remains fundamentally unresolved, and the need to further expand demand at home and abroad is highlighted. ing.”
