China: Manufacturing and non-manufacturing PMIs rise in March
The National Bureau of Statistics’ Manufacturing Purchasing Managers’ Index (PMI) rose from 49.1 in February to 50.8 in March, above market expectations. Consequently, the index moved above the 50.0 no-change threshold, signaling an improvement in manufacturing sector operating conditions from the previous month. The headline print reflected improvements in the readings for new orders, output and employment.
The National Bureau of Statistics’ non-Manufacturing PMI rose from 51.4 in February to 53.0 in March, above market expectations. This was the result of stronger services and construction activity.
Nomura analysts cautioned against overinterpreting the March data:
“In our view, the upside surprises to both official PMIs were largely due to incomplete seasonal adjustments at the beginning of the year. Historically, two weak January and February readings (sub-50) tended to be followed by a strong March readings (above-50), when the Chinese New Year day fell in early February. Based on all the high-frequency data we have observed so far, we think underlying economic momentum remained subdued in March.”
United Overseas Bank’s Ho Woei Chen highlighted weak spots in the data:
“Deflation and weak employment are still evident in the Mar PMIs, as selling/ output prices continued to contract in Mar, while components of the nonmanufacturing PMI still reflect some aspects of underlying weaknesses.”