In March, China’s manufacturing activity rocked to its highest rate of expansion in a year. This great news was first reported with the release of official data by the National Bureau of Statistics on Monday. The official purchasing managers’ index (PMI) came in at 50.5. That’s up just a touch from last month and in line with Reuters poll expectations. This expansion indicates that Beijing’s stimulus measures are effectively supporting an economic recovery amid ongoing trade tensions with the United States.
This data release comes as trade tensions have reached a historic fervor. This comes on the heels of U.S. President Donald Trump’s announcement of a 20% tariff on all Chinese imports. This decision was primarily driven by China’s purported role in the illegal fentanyl supply chain. Beijing responded in kind, moving swiftly to slap punitive tariffs of up to 15% on targeted U.S. goods. They only targeted energy and agricultural products.
The PMI data underscores the impact of Beijing’s economic strategies as China navigates the challenges posed by international trade disputes. The latest increase in manufacturing activity indicates that recent federal government efforts are offsetting a slowdown and beginning to stabilize growth. In addition, the non-manufacturing PMI, which includes both services and construction, improved, climbing to 50.8 in March from 50.4 in February.
Looking forward, analysts are projecting a thrilling increase in manufacturing activity. Caixin/S&P Global manufacturing PMI should rise from 50.8 to 51.1 this month. This data is expected out on Tuesday, and will offer more clarity on China’s economic direction.