BEIJING--An official gauge of China's factory activity edged
higher in March, giving a modest sign of improvement in the
manufacturing sector of the world's second-largest economy.
But the good news was offset by a somewhat weaker reading from a
private-sector measure, which was down from February and stuck in
contractionary territory.
Analysts said the slight upturn in the official manufacturing
Purchasing Managers' Index, released on Wednesday, reflected the
government's targeted support measures, which have ranged from an
interest-rate cut and other monetary measures as well as more
fiscal spending aimed at key parts of the economy.
They added that more would be needed to sustain the modest
upturn.
"The official manufacturing PMI data show that the previous
economic policies are starting to show some effect," said Hao Zhou,
economist at ANZ Bank.
"I think there will be more support measures being rolled out
soon to stabilize market expectations."
The official manufacturing index rose to 50.1 from 49.9 in
February, the statistics bureau and the China Federation of
Logistics and Purchasing said, putting the measure slightly in
expansion territory. A reading above 50 shows expansion compared
with the previous month, while anything below that indicates
contraction.
The March PMI reading beat the median 49.8 forecast from a Wall
Street Journal poll of economists.
But a final PMI reading from HSBC Holdings PLC came in at 49.6,
down from 50.7 in February, though that was better than its initial
measure of 49.2 for March released last week.
China posted its weakest economic growth in 24 years in 2014 as
the gross domestic product expanded 7.4%. The government has set an
even lower target of 7% for this year.
The weakness carried over into the first two months of 2015.
Growth rates for industrial production, retail sales and investment
in factories and other fixed assets in January and February came in
significantly below economists' expectations, while housing sales
continued their swoon, according to government data released
earlier.
Many companies are still struggling with debt, and China has
used a range of monetary tools to help out. It cut interest rates
in November and twice reduced the amount of deposits that banks
need to keep on reserve with the central bank. The most recent move
on the reserve requirement, which effectively lets banks lend more
to needy companies, took effect one month ago.
Beijing has also stepped up spending on railways and subways,
cut taxes and move to reduce red tape for the nation's
businesses.
Despite the slightly better official factory data for March,
there were some worrying signs. The subindex measuring new orders
dropped to 50.2 in March from 50.4 in February, though it was still
in positive territory. The production subindex improved to 52.1
from 51.4, the statement said.
Meanwhile, the official nonmanufacturing Purchasing Managers'
Index, a gauge of activity outside factory floors, fell to 53.7
from 53.9 in February.
Grace Zhu and William Kazer
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