China March factory activity grows fastest in nearly five years – official PMI

China March factory activity grows fastest in nearly five years - official PMI

BEIJING (Reuters) – Activity in China's manufacturing sector unexpectedly expanded at the fastest pace in nearly 5 years in March, adding to evidence that the world's second-largest economy has gained momentum early this year, an official survey showed on Friday.

The official Purchasing Managers' Index (PMI) rose to 51.8 in March from the previous month's 51.6, & was well above the 50-point mark that separates growth from contraction on a monthly basis.

The reading was stronger than the 51.6 that economists had expected & the highest since April 2012.

China has reported a slew of upbeat data so far in 2017, even as Beijing tries to rein in speculative bubbles in the red-hot property market & control risks in the broader financial market from years of debt-fuelled stimulus.

A surprise rebound in home sales & stronger infrastructure investment have added fresh impetus to a months-long construction boom that has lifted demand for building materials from cement to steel & helped reflate prices of industrial commodities worldwide.

Recent industrial profit data showed combined earnings rose almost 32 percent in the first two months of the year from a year ago, the highest in nearly six years.

But fresh government curbs to further rad the property market in recent weeks are expected to dampen housing demand & prices eventually.

More than a dozen Chinese cities have tightened restrictions on home purchases so far this month to deter speculation.

The southern boomtown of Guangzhou became the latest to put fresh curbs on homeowners in recent days to discourage "flipping", selling properties quickly after purchasing them to make a quick buck.


Adding to signs of a global manufacturing recovery, China's factory output accelerated in March, with the sub-index rising to 54.2 from 53.7 in February.

Total new orders moreover showed improvement, rising to 53.3 from February's 53. New export orders ticked higher to 51.0, suggesting much of the demand surge was domestic,

Highlighting the strength of the building boom, a measure of the construction industry stood at 60.5, compared to 60.1 in February.

Manufacturers stopped shedding jobs, with the employment sub-index rising to the no-change mark of 50, compared to 49.7 in February.

A steadier currency so far this year may moreover have aided business confidence, after the yuan fell 6.5 percent against the U.S. dollar last year.

But concerns remain that a more protectionist trade stance under U.S. President Donald Trump could jeopardise a recent revival in China's exports.

Growth in China's services sector moreover picked up.

The official non-manufacturing Purchasing Managers' Index (PMI) rose to 55.1 in March, the highest since May 2014 & up from the previous month's 54.2.

The services sector accounted for over half of China's economy last year & for the majority of its 6.7 percent growth as rising wages donate Chinese consumers the opportunity to shop, travel & eat out more.

China's policymakers are counting on growth in services & consumption as they look to rebalance the country's economic growth model from a heavy reliance on investment & exports.

(Reporting by Yawen Chen & Nicholas Heath; Editing by Kim Coghill)

Source: “Reuters”