China’s manufacturing growth fails to ease fears of economic slowdown

Manufacturing activity on the mainland grew last month as businesses resumed after the Lunar New Year holiday, an official survey showed, painting a rosier picture than expected.

But the manufacturing growth – which was better than broad market expectation of prolonged contraction – may not be enough to dispel fears about weakening economic expansion in the first quarter.

As a result, economists have continued to call for stronger policy easing to combat a growth slowdown and persistent deflationary pressures.

The official purchasing managers index (PMI) for the mainland’s manufacturing sector, compiled by the National Bureau of Statistics, rose to 50.1 last month. A figure above 50 reflects expansion while a figure below it indicates contraction.

Before March, the PMI had been below 50 for two consecutive months.

Last month’s expansion indicated factory activity had reversed a contraction. But it was still lower than the same period last year, when the PMI was 50.3.

“The readings suggest that manufacturing conditions, among large firms at least, have held up better than expected,” said Julian Evans-Pritchard, China economist at Capital Economics. “But this doesn’t do away with the need for more policy support to prevent growth from slipping further.”