China's Manufacturing Activity Picks Up in March

April 1, 2010
Manufacturing has expanded each for the past year.

The HSBC China Manufacturing PMI, or purchasing managers' index, rose to 57 last month after falling to 55.8 in February.

A separate official PMI published by the China Federation of Logistics and Purchasing (CFLP) showed manufacturing activity rose to 55.1 after slipping to 52.0 in February.

Manufacturing activity in the export-driven economy expanded for the 12th straight month on the back of sharp gains in new orders led by strong overseas and domestic demand, HSBC chief economist Qu Hongbin said.

"Another substantially high headline manufacturing PMI reading, combined with strong growth of exports, points to an acceleration in industrial production and likely over 11% year-on-year GDP growth in the first quarter," Qu said.

"With inflation pressures rapidly accumulating, this increases the risk of interest rate hikes in the coming months."

Staffing levels in the sector also continued to rise in March, with around 18% of respondents reporting an increase from a month earlier, the bank said.

China returned to double-digit growth in the fourth quarter, growing by 10.7% on massive public spending and rampant bank lending.

The government has been clamping down on lending amid fears it is fueling inflation and causing damaging bubbles in the world's third-largest economy.

Many analysts expect Beijing to start raising interest rates in the next few months as it resorts to more aggressive measures to cool the red-hot economy.

Copyright Agence France-Presse, 2010

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