China’s official purchasing managers’ index (PMI) hit 50.9 in March, its 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.
The PMI is a widely watched indicator of economic health, with a reading above 50 suggesting expansion while anything below points to contraction.
British bank HSBC, whose survey focuses more on smaller enterprises than the official data, said its final PMI 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.
HSBC’s PMI readings for many other Asian economies all improved in the month, with Vietnam hitting a 23-month high of 50.8.
South Korea saw its strongest figure for a year, reaching 52.0 thanks to solid increases in output and new orders as demand from China and Japan was strong, HSBC said.
In Taiwan, the PMI climbed to 51.2 in March, the fourth consecutive month of improvement and up from 50.2 in February, on the back of new orders from both home and abroad continuing to rise.
HSBC’s index for Indonesia reached a four-month high of 51.3, from 50.5 in February, underpinned by a faster expansion in new orders and a slight increase in production, the bank said.
India’s figure was also positive at 52.0 in March, although that was the lowest reading for 16 months and down from 54.2 in February, as repeated power cuts weighed on activity.
Speaking of the latest data CIMB head of research Song Seng Wun told Dow Jones Newswires: “It paints a story of modest recovery rather than an all-out, straight line all-guns-blazing story, which would have pleased the market more.”
Qu said that Beijing may keep to relatively loose monetary policy to boost growth as inflationary pressures were easing, with input prices falling and the economy suffering from “lingering external headwinds” — an apparent reference to the eurozone’s woes and the sluggish US recovery.
China’s economy expanded 7.8 percent last year, its lowest annual figure since 1999, in the face of weakness at home and in key overseas markets.
But it grew 7.9 percent in the final three months of 2012 from a year earlier, snapping seven straight quarters of slowing growth.
However, government figures pointed to a slowdown in retail sales growth in February, suggesting the budding recovery may be fragile.
Inflation in China 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.