BEIJING (Reuters) – China’s factory activity was expected to have grown at a faster pace in March as factories that had closed for the Lunar New Year holiday ramped up production amid improving foreign demand, a Reuters poll showed on Monday.
The official manufacturing Purchasing Manager’s Index (PMI) is expected to edge up to 51.2 for March from 50.6 in February, according to the median forecast of 30 economists polled by Reuters. A reading above 50 indicates an expansion in activity on a monthly basis.
“The key driver (in March PMI) is likely to be continued resilience in external demand, as shown by Korea’s daily exports in the first 20 days of March, which accelerated to 6.5% on a 2Y CAGR basis vs. 5.2% for full month of February,” analysts at Morgan Stanley wrote in a report last week.
“This would boost export orders and production.”
Analysts at Industrial Bank in Shanghai attributed the acceleration to more working days in March and an earlier than usual resumption of business at Chinese factories this year.
Millions of workers who normally travel home over the Lunar New Year holiday had stayed put this year due to COVID-19 fears. That kept factories humming over the period.
China has successfully curbed the domestic transmission of the COVID-19 virus in northern China, leading to quarantine restrictions and testing requirements being scaled back as life returns to normal.
Beijing has set an annual economic growth target at above 6% this year, below analyst expectations, to allow room for uncertainties and a response to changes. Premier Li Keqiang has warned against any sharp turn in policy making.
The official manufacturing PMI, which largely focuses on big and state-owned firms, and its sister survey on services will both be released on Wednesday.
The private Caixin manufacturing PMI will be published on Thursday. Analysts expect the headline reading will rise to 51.3 from 50.9 in February.
(Reporting by Stella Qiu and Gabriel Crossley, editing by Larry King)