- The PMI released on Saturday rose from 50.3 in February to 51.5 in March.
- Analysts surveyed by Reuters had predicted that the reading would rise only slightly to 50.5 data, suggesting that the Chinese economy had more momentum in the first quarter than expected last year.
BEIJING (Reuters) – Growth in the Chinese manufacturing industry has risen faster than expected in March Mills have boosted production as construction activity is back in full swing.
The PMI, which was released on Saturday, rose from 50.3 in February to 51.5 in March, well above the 50-point mark that separates growth from contraction on a monthly basis.
Analysts surveyed by Reuters had predicted that the reading would rise only slightly to 50.5.
The results add to a growing amount of data suggesting that China's economy picked up more momentum in the first quarter of last year than analysts had expected. This should keep synchronized global growth for a while longer, even as trading voltages develop.
February pressure had been the lowest in 1-1 / 2 years, but many analysts suspected that this was due to disruptions associated with the long New Year holidays, not a sharp decline in consumption.
In fact, the March survey showed that manufacturers are shifting up as usual, as seasonal demand increases at home and abroad. The sub-index for production jumped from 50.3 in February to 53.1, while total order intake rose from 51.0 to 53.3 and export orders rose from 49.0 to 51.3.
The China Logistics Information Center commented on PMI figures that economic growth in the first quarter would be around 6.8 percent. At the beginning of this year, the economists interviewed by Reuters registered a decline to around 6.6 percent.
Large companies recorded a slight increase in growth, while small business activity increased slightly after a decline in February.
In the first two months of the year, exports were better than expected, especially for the Tech products, the fastest growing segment of the Chinese industrial sector. Although a sub-PMI for hi-tech manufacturing slipped in March, growth remained solid.
However, a dramatic escalation of trade tensions with the US is clouding the prospects for China's "old economy" high-tech and "new economy" technology companies.
The Trump government imposed heavy tariffs on steel and aluminum imports last week and then targeted China with plans for additional tariffs of up to $ 60 billion, which are likely to focus on tech and telecommunications products.
"Stress tests have shown that the new US tariffs will have relatively little impact on Chinese steel, Chinese steel companies should not be overly concerned and should focus on ensuring demand from the domestic market and our major exporters", so China Steel Logistics professional committee said.
"But it's worth noting that the amount of steel products we deliver to consumers in the US through the global supply chain could exceed China's direct exports to the United States," he added. "China should proactively resist US unilateral trade protectionism in order to maintain the global supply chain."
Jump forward or back?
This spring, the surprising 1-1 / 2-year run of Chinese manufacturers could experience a big test.
In the first quarter, Chinese steel companies bucked expectations for a winter break and continued to boost production in response to strong sales as they boosted lending, investment and new hires, according to a China Beige Book poll.
Production continued to increase after the winter smog control leaked on 15 March in many areas. A separate purchasing managers' index for the steel sector rose from 49.5 in February to 50.6 in March, according to the China Logistics Information Center (CLIC).
But production has pushed steel stocks to multi-year highs, drastically reduced prices, and reduced mills' profit margins.
At the same time, growth in real estate sales and new construction appears to be slowing, and Beijing has slowed infrastructure spending by some communities due to concerns over high debt levels.
These factors, coupled with rising borrowing costs, should weigh on activity as economists continue to forecast that China's growth will slow to around 6.5 percent by the end of the year.
Supported by government spending on infrastructure, a resilient real estate market, and unexpected export growth, China's industrial and industrial companies helped the economy grow at an unprecedented rate of 6.9 percent in 2017.
Service growth is also accelerating
A sister survey showed that growth in China's services sector also picked up in March, with the PMI for the non-manufacturing sector rising from 54.4 to 54.6.
An undervaluation for construction activity was 60.7 in March, compared to 57.5 in February.
Chinese policymakers expect service and consumption growth to reorient their economic growth model out of their heavy dependence on investment and exports. The services sector today accounts for more than half of the economy, and rising wages give Chinese consumers more spending power.
China is aiming for economic growth of around 6.5 percent this year, the same goal as in 2017 as it continues to drive its financial risk reduction campaign, Premier Li Keqiang said earlier this month.
The manufacturing and services manufacturing PMI rose to 54.0 points in March (February 52.9).
(edited by Kim Coghill)