(Yicai) March 31 -- Activity in China’s manufacturing sector rebounded from a two-month contraction this month, after expanding at the fastest rate since last March as businesses cranked up production following the Lunar New Year holiday and economic policy effects continued to feed through.

The manufacturing purchasing managers index rose to 50.4 in March, according to data released by the National Bureau of Statistics today. A reading above 50 indicates expansion. The PMI stood at 49 last month and 49.3 in January.

The rebound was due in part to seasonal factors, and also showed that confidence in China’s economy strengthened after the Two Sessions, the country’s two key policy-setting meetings held earlier this month, said Zhang Liqun, special analyst at the China Federation of Logistics and Purchasing.

Zhang also noted that competition is intensifying within industries, the divergence in performance across sectors is widening, and the imbalance between supply and demand remains a key issue.

Efforts to fully implement the Two Sessions’ agenda should be stepped up, Zhang said. The country should also strengthen countercyclical economic policy, advance major state investment projects, and keep pushing for more corporate orders, higher production and employment, and broader consumer demand, so that the 15th Five-Year Plan gets off to a solid start.

New orders rose to 51.6 from 48.6 last month, the NBS data also showed, returning above the boom-bust line after two months. New export orders climbed to 49.1 from 45.

Input costs surged to 63.9 from 54.8, while output prices climbed to 55.4 from 50.6, the highest level since April 2022 and staying in expansion territory for the third straight month.

The synchronized rebound in manufacturing supply, demand, and prices suggests a broad-based recovery with a firmer foundation, said Wen Tao, analyst at the China Logistics Information Center. He added that increasing raw material prices also reflect cost-push pressures alongside demand-driven gains.

The non-manufacturing PMI, which includes construction and services, rose to 50.1 from 49.5 in February, returning to expansion for the first time since December, according to the NBS data. Activity in the construction industry rose to 49.3 from 48.2, while that in the services sector climbed to 50.2 from 49.7.

The rebound in infrastructure investment and production-oriented service sector activity after the Chinese New Year holiday helped lift the non-manufacturing sector’s overall business climate, said Wu Wei, an expert at the China Logistics Information Center.

The composite PMI output index, which combines the manufacturing PMI’s production sub-index and the non-manufacturing PMI, rose to 50.5 from 49.5, returning above the boom-bust line after a one-month contraction.

Editor: Futura Costaglione