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China's manufacturing growth rises after 3-month decline

Source:   Time:

BEIJING, April 1 (Xinhua) -- China's manufacturing growth rose in March, for the first time after three months of declines, official data showed on Tuesday.

The purchasing managers' index (PMI) for the country's manufacturing sector rose to 50.3 percent last month, up from 50.2 percent in February, according to a statement jointly released by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing.

The index shows China's manufacturing sector is stable, said Zhao Qinghe, a senior analyst with the NBS.

A reading below 50 indicates contraction, while above 50 signals expansion.

Zhao attributed the rise to the resumption of production and business after the Spring Festival holiday.

The manufacturing PMI in March usually would be 2.8 percentage points higher from February on average, and the 0.1-percentage-point growth in March this year showed the economy did not improve remarkably, said Liu Ligang, chief China economist at ANZ Banking Group.

"The moderate rise was mainly driven by new export orders. It could be partially driven by seasonality, but the very moderate rise in employment suggests that the seasonality was rather small and demand is still weak," said Lu Ting, chief China economist with Bank of America Merrill Lynch.

The two sub-indexes for foreign trade both rose in March. The sub-index for new export orders gained 1.9 percentage points to 50.1 percent, while the index for imports climbed 2.6 percentage points to 49.1 percent.

The sub-index for employment climbed 0.3 percentage points to 48.3 percent, but still below the 50-percent expansion-contraction watershed.

The sub-index for production stood at 52.7 percent in March, up 0.1 percentage points from February. The sub-index for new orders also gained 0.1 percentage points to 50.6 percent, the statement said.

But the official rise went against the depressing HSBC manufacturing PMI, which sampled small- and medium-sized enterprises.

The HSBC/Markit PMI, issued on Tuesday, dipped to an eight-month low of 48 in March, from a final reading of 48.5 in February.

It suggests that though overseas demand is stable, domestic demand is weakening, said HSBC's chief China economist Qu Hongbin.

"The difference between HSBC's and official PMI could be attributed to the fact that the HSBC PMI covers mainly small enterprises which suffered more in the current slowdown," Lu said.

One factor behind the recent slowdown is the government's anti-pollution campaign, which has shut down numerous small steel and cement mills, he said, adding that rising labor costs also squeezed many small businesses.

The HSBC PMI in March showed small and medium-sized enterprises are facing tough times and that uncertainties will confront the overall economy in the future, Liu said.

As some government officials' speeches have showed signals to boost economic growth, the worst time for the Chinese economy is over, Liu said.

Lu echoed the view and forecast the government will introduce fiscal measures to boost growth.

The government has set the country's growth target for 2014 unchanged at around 7.5 percent and the target for inflation at around 3.5 percent. Enditem

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