China’s manufacturing PMI back in expansion

China’s manufacturing Purchasing Managers’ Index (PMI) rebounded in March, reaching a seven year high after being boosted by stimulus. Most forecasts were for a contraction.

The official PMI figure came in at 50.1 for the month of March, up from February’s 49.9. A number above 50 indicates expansion, while below 50 signals contraction.

Thus the data show that factories in the world’s second-largest economy are being bolstered by the Chinese government’s stimulus efforts.

Chinese Premier Li Keqiang last month said policy makers will step in if growth slows too sharply, while central bank Governor Zhou Xiaochuan flagged room to act. Wednesday’s reading suggests China’s factories, marred by deflation and overcapacity, may be picking up after two interest-rate cuts in the last six months and strengthening in U.S. demand.

“It seems China’s pro-growth measures have achieved some results on the ground,” Zhou Hao, an economist at Australia & New Zealand Banking Group Ltd., said from Shanghai. “However, the downward pressure on China’s economy remains, requiring authorities to take additional measures to help growth.”

The final PMI from HSBC Holdings Plc and Markit Economics for March was 49.6, up from the flash reading of 49.2.
The official PMI beat economists’ forecasts for a reading of 49.7. The non-manufacturing PMI slipped to 53.7 in March, from 53.9 a month earlier.

The yuan strengthened after the PMI data and the Australian dollar also gained since China is a major trading partner for Australia.

The post China’s manufacturing PMI back in expansion appeared first on Forex Circles.

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