Factory activity in China unusually expanded in March from a drop the month before; however, analysts caution that a durable near-term restoration is far from assured as the worldwide coronavirus crisis knocks foreign demand and threatens a severe economic plunge.
China’s official Purchasing Managers’ Index (PMI) surged to 52 in March from a drop to the lowest ever 35.7 last month, the National Bureau of Statistics (NBS) stated Tuesday, above the 50-point mark that separates month-to-month growth from contraction.
Analysts had anticipated the March PMI to come in at 45.0.
The NBS attributed the surprise revival in PMI to its record low base in February and cautioned that the readings don’t signal stabilization in economic activity.
That view was reiterated by many analysts, who warn of a further period of struggle for China’s companies and the broader economy due to the fast spread of the virus across the world, the unparalleled lockdowns in several nations and the almost near certainty of a global recession.
The pandemic’s sweeping impact on manufacturing was marked in two of Asia’s main export engines, Japan and South Korea. In Japan, industrial output climbed at a slower pace in February, and factories expect a plunge this month, whereas manufacturing in South Korea shrank the most in over a decade.
Economists are already forecasting a steep shrink in China’s first-quarter gross domestic product GDP), with some expecting a year-on-year slump of 9% or more – the first such contraction in three decades.