China: PMI manufacturing rebounds in March on policy stimulus
March 31, 2019
The manufacturing purchasing managers’ index (PMI) published by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP) rose from 49.2% in February to 50.5% in March. The print overshot the 49.5% expected by market analysts and represented the first expansion in four months. Therefore, the index lies above the 50.0% threshold that separates expansion from contraction in the manufacturing sector.
March’s reading reflected a broad-based improvement as all sub-categories of the index gained ground compared to February. The increase was mostly driven by the all-important new orders and output categories, with both expanding at the fastest pace in six months. Despite improving production conditions, job creation remained below the 50.0%-mark. Export orders fell for the tenth consecutive month, highlighting the fragility of global demand. Input prices—a reliable leading indicator for inflation—continued to recover in March on stronger domestic activity and higher commodity prices.
Raymond Yeung, chief economist for Greater China at ANZ, stressed that:
“The government’s policies, which aim to boost lending to small and medium-sized enterprises, are apparently bearing fruit, although this needs to be borne out by a few more months of data after a large decline in oil prices in December dragged on the sub-index. […] All in all, March’s PMI data suggest that the cyclical downturn in China’s GDP growth may have found a bottom in Q1, registering 6.4% y/y, according to our forecasts.”