PMI Photo:VCG

China's private Caixin manufacturing purchasing managers' Index (PMI) rose to 51.1 points in March, up 0.2 points from February, marking the fifth consecutive month in expansion territory and a new high since March 2023, according to data released on Monday.

The reading followed China’s official factory activity data released by the National Bureau of Statistics (NBS) a day earlier, which showed an expansion for the first time in six months. The figures show signs of improvement in China’s manufacturing production and business operations and a noticeable improvement in economic activity in the first quarter, experts said. 

Overall, the manufacturing sector continued to improve in March, with both supply and demand expanding at a faster pace. External demand also increased, leading to higher purchasing volumes. Business optimism is on the rise too, Wang Zhe, a senior economist from Caixin Insight Group wrote in a note on Monday.

According to the Caixin manufacturing PMI sub-index, both supply and demand expanded at a faster pace in March. The manufacturing production index and new orders index continued to rise, with the production index reaching its highest level in 10 months. 

Due to improved external demand, the new export orders expanded for a third consecutive month in March to their highest level in 12 months. 

Surveyed private companies reported that market conditions have markedly improved, leading to an increase in demand and a rise in new business volume.  

Entrepreneurs also reported rising optimism about growth momentum and anticipate continued improvements in production and sales in the coming months, according to the survey.

The Caixin manufacturing PMI followed China's official manufacturing PMI released a day earlier which came in at 50.8 for March, up from 49.1 in February, returning to expansion territory in six months.

The numbers show that China’s economic recovery has gained significant pace. "The pace of economic expansion in the domestic market has further accelerated, with a strengthening of domestic demand and a recovery in consumer and overall business confidence,” Zhou Maohua, an economist at China Everbright Bank told the Global Times on Monday.

Both domestic consumption and investment momentum are growing, leading to a noticeable improvement in economic activity in the first quarter compared to the fourth quarter last year, Zhou said.

China's industrial profits rose 10.2 percent in the first two months of 2024, reversing a decline of 2.3 percent in 2023. 

In January-February period, retail sales expanded by 5.5 percent year-on-year, while the fixed-asset investment gained 4.2 percent in year-on-year terms. The industrial output grew 7 percent year-on-year in the first two months.