China’s manufacturing sector is experiencing a significant boost, with activity expanding at the fastest pace in 13 months in March. According to a private survey, the Caixin/S&P Global manufacturing PMI rose to 51.1, surpassing analysts’ expectations and marking the fifth consecutive month of expansion.
The positive results are attributed to growing new orders from both domestic and international customers, as well as increased business confidence, which hit an 11-month high. This follows recent better-than-expected export and retail sales data, indicating a strong start to the year for the world’s second-largest economy.
In response to the upbeat data, Citi raised its forecast for China’s 2024 growth to 5.0% from 4.6%, citing recent positive trends and policy initiatives. Premier Li Qiang also announced an ambitious economic growth target of around 5% at the annual meeting of China’s parliament in March.
Despite the optimistic outlook, analysts caution that policymakers may need to implement additional stimulus measures to achieve the growth target. Challenges such as a deep slump in the property sector and the need for more job creation remain significant hurdles.
Nevertheless, the survey showed that manufacturers’ output and new orders accelerated in March, with a notable increase in external demand. Business confidence for the year ahead also rose to its highest level since April 2023, driven by positive developments such as lower input costs.
While companies remain cautious about adding employees, citing prevailing uncertainties and unfavorable factors, there is a general consensus on the need to boost both domestic and external demand to address ongoing economic challenges.