China’s economy stabilised in March, recovering after taking an enormous hit due to attempts to stop the spread of the coronavirus during February.
The government’s manufacturing activity survey rose to 52.0 after seasonal adjustments, rebounding from a record-low level of 35.7 in February. The result was well above the 45.0 level expected by economists polled by Reuters.
It was also well above the January reading of 50.0, which made some western analysts cautious.
A figure above 50 signals an improvement from the prior month with the distance from 50 indicating the net proportion of firms reporting an improvement.
The non-manufacturing or services survey of activity rose to 52.3 in march having fallen to 29.6 a month earlier.
Combined, the composite PMI – measuring activity levels across the broader economy – rebounded from 28.9 in February to an improbable 53.0 in March.
This survey is skewed towards big companies, usually state-owned or controlled.
Reuters pointed that analysts say the index could overstate the true improvement as it measures the net balance of firms reporting an expansion or contraction in activity.
So if a company merely resumed working after a forced stoppage, it would read as an expansion without saying much about the overall level of activity.
A second survey from private groups, Caixin magazine and the Markit group of the UK, will produce their manufacturing survey today (Wednesday) and the services and combined survey results on Friday. This survey is skewed more towards small to medium businesses in the economy.
Despite the rebound (which China’s National Bureau of Statistics also cautioned that it doesn’t mean the economy has stabilised), economists say China’s first-quarter will show a big fall in activity when the GDP is released later in April – April 17.
Some expecting a year on year slump of 9% or more – the first such contraction in three decades.
