Link Securities | China’s official advance manufacturing activity index, the manufacturing PMI, came in at 51.9 in March, above the 51.6 expected by the analysts’ consensus, although it was below the 52.6 of the previous month. We recall that a reading above 50 points indicates expansion of activity from the previous month, while a reading below that level indicates contraction of activity.
Most components decelerated after February, although production, new orders and exports remained in expansionary territory. However, employment and inventories of finished goods fell again, after slight growth in the previous month. Input prices slowed significantly, while retail prices fell again. Industries of all sizes indicated slower growth.
Meanwhile, China’s official flash index of non-manufacturing activity, the non-manufacturing PMI, rose in March to 58.2 from 56.3 in the previous month, also beating the consensus estimate of 55.0 points. The reading reflected a substantial acceleration in the construction sector (with positive findings from the latest developer investment data), while services recorded a sustained improvement. The improvement in the overall index was supported by a pick-up in demand, confirming the recovery following the removal of the “zero covid” policies.
Moreover, the results also validate Premier Li’s remarks yesterday at the Boao Forum, indicating that the recovery momentum in March is likely to be better than that of the January-February period.
