Updated: 04/01/2013 10:53 | By Agence France-Presse

China manufacturing index shows new growth

Manufacturing activity in China expanded at its fastest pace in almost a year last month, official data showed Monday, indicating conditions in the world's number two economy continued to improve.


China manufacturing index shows new growth

A woman works in a textile factory in Jiujiang, east China's Jiangxi province, January 16, 2013. Manufacturing activity in China expanded at its fastest pace in almost a year last month, official data showed Monday, indicating conditions in the world's number two economy continued to improve.

The official purchasing managers' index (PMI) hit 50.9 in March, the highest since April 2012 when the figure stood at 53.3, according to the National Bureau of Statistics and the China Federation of Logistics and Purchasing (CFLP).

PMI is a widely watched barometer of the health of China's economy, with a reading above 50 indicating expansion while anything below points to contraction.

The March reading improved from 50.1 in February and signalled the sixth consecutive month of expanding manufacturing activity in the country.

The rebound in PMI last month was led by increasing new orders as demand improved, driven by exports and investment, said Zhang Liqun, a government analyst, in a CFLP statement.

"The current data showed the economy generally remained stable. But we have to keep a close eye on changes that may take place in the coming months," Zhang said.

British bank HSBC -- whose survey focuses more on smaller enterprises -- said its final PMI for March stood at 51.6 in March, up from 50.4 in February, when the reading dipped to its lowest since October.

"China's recovery continues, mainly driven by the gradually improving domestic demand conditions," said Qu Hongbin, a Hong Kong-based economist with the bank, in a statement.

Declining input prices and "lingering external headwinds" -- an apparent reference to the eurozone's woes and the sluggish US recovery -- indicated that inflationary pressures were easing, he said.

China's economy expanded 7.8 percent in 2012, its slowest pace for 13 years, in the face of weakness at home and in key overseas markets.

But growth accelerated in the final three months of last year to 7.9 percent, snapping seven straight quarters of weakening expansion.

However, government figures pointed to a slowdown in retail sales growth last month, suggesting the budding recovery may be fragile.

China's inflation hit a 10-month high of 3.2 percent in February, up from January's 2.0 percent, as holiday season spending and rapid credit growth accelerated price rises.

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