BEIJING(Reuters) – China’s manufacturing activity expanded at slower pace in March, official data showed on Friday, suggesting hopes of a strong post-COVID economic recovery are faltering amid weaker global demand and a continued property market downturn.
The official manufacturing purchasing managers’ index (PMI) stood at 51.9, against 52.6 in February, according to data from the National Bureau of Statistics (NBS), above the 50-point mark that separates expansion and contraction in activity on a monthly basis.
That slightly exceeded expectations of 51.5 tipped by economists in a Reuters poll. The February figure had grown at the fastest pace in more than a decade.
China’s economic activity picked up in the first two months of 2023 as consumption and infrastructure investment drove a recovery after the end of COVID-19 disruptions and retail sales swung back to growth.
But there are questions over the strength and sustainability of the post-reopening rebound. Exports remain weak and new home sales continue to fall, although the rate of decline is narrowing.
The world’s second-biggest economy has set a modest target for economic growth this year of around 5% after it cooled to only 3% last year, one of the weakest showings in nearly half a century.
To support the rebound, China’s central bank this month unexpectedly cut the amount of cash that banks must hold as reserves for the first time this year.
While business and consumer sentiment is starting to pick up, the manufacturing sector remains under pressure to maintain growth momentum amid sluggish global demand and stubbornly high costs.
Any fallout from a recent crisis of confidence in the global banking sector could also affect demand for China’s goods, adding to pressure on manufacturers.
Official data this week showed the slump in Chinese industrial firms’ profits deepened in the first two months of the year, marking a downbeat start to the recovery.
(Reporting by Liangping Gao and Ryan Woo; Editing by Jamie Freed)
