In March, China’s manufacturing sector experienced its fastest expansion in 13 months, according to a private survey. This growth was driven by an increase in new orders from domestic and international customers, with business confidence reaching an 11-month high. The Caixin/S&P Global manufacturing purchasing managers’ index (PMI) rose to 51.1, above analysts’ expectations and marking the fifth consecutive month of growth.
The positive result follows recent data showing better-than-expected export and retail sales figures, indicating a promising start to the year for the world’s second-largest economy. Citi has increased its forecast for China’s 2024 growth to 5% from 4.6%, citing recent positive data and policy implementation.
Despite this optimistic outlook, analysts believe that policymakers may need to introduce more stimulus measures to achieve this target. The weak base effect of 2022, which boosted growth data in 2023, will no longer be available. Additionally, the ongoing downturn in the property sector continues to weigh on economic activity.
The PMI survey revealed that manufacturers experienced increased output and new orders in March, with external demand also rising. Business confidence for the year ahead reached its highest level since April 2023, driven by positive news such as reduced input costs. Although raw material prices have decreased, providing manufacturers with an opportunity to lower prices amid fierce market competition, companies are cautious about adding employees. The overall economic outlook is still uncertain, with challenges such as subdued employment, low prices, and a lack of effective demand. Wang Zhe, a senior economist at Caixin Insight Group, emphasized the need to boost both domestic and external demand to address these challenges.
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