China’s manufacturing activity grew for the first time in four months in March with quicker rises in output and overall new work, according to a private report released on Monday, which also showed the fastest growth in eight months.
The Caixin China General Manufacturing Purchasing Managers’ Index, which measures the manufacturing sector and is weighted toward private companies, came in at 50.8 in March, rebounding 0.9 percentage points from the previous month, Caixin magazine and research firm Markit said.
A reading above 50 signals growth while one below 50 means contraction.
The Caixin PMI is a private survey focusing on smaller businesses and offers a first glimpse into the operating environment. It is closely watched as an alternative to the official PMI.
The official PMI for March released on Sunday was 50.5, compared with 49.2 in February.
Although consistent with only a marginal pace of improvement, the Caixin index was the highest since July.
“Overall, with a more relaxed financing environment, government efforts to bail out the private sector and positive progress in Sino-US trade talks, the situation across the manufacturing sector recovered in March, and the employment situation improved greatly,” said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group.
Manufacturing production rose for the second month in a row in March. Although modest, the rate of increase was the quickest seen since last August, which was supported by a stronger rise in total new work.
The activity index includes such measures beyond actual production as new orders.
The sub-index for new orders climbed to its highest level in four months, and the gauge for new export orders returned to expansionary territory, showing that both domestic and external demand rebounded moderately, the report said.
Staffing levels at goods producers increased in March — the first expansion since October 2013. Some firms said they were hiring additional workers to support more production and new business.
Hiring also coincided with sustained signs of stretched capacity at manufacturers, as outstanding workloads continued to rise moderately.
“Data from the National Bureau of Statistics showed unemployment in urban areas for February was the highest since early 2017, causing concerns about the job market. The situation improved significantly in March, indicating easing pressure on employment,” Zhong said.
Gauges for input costs and output charges edged into positive territory, with the latter posting a higher reading than the former, reflecting lower pressure from raw material costs, Caixin said.
Optimism toward the year-ahead outlook for production improved to a 10-month high in March, with a number of firms linking positive forecasts to expectations of further improvements to overall market conditions, the report said.
The official general PMI released on Sunday, which tracks both the manufacturing and services sectors, jumped 1.6 points to 54, indicating that the overall expansion of production and operation activities of Chinese enterprises accelerated in March, said Zhao Qinghe, senior statistician at the National Statistics Bureau.
The official manufacturing PMI rose for the first time over the past four months, up 1.3 points to 50.5 in March, while the non-manufacturing PMI advanced by 0.5 points to 54.8.