China's manufacturing activity surged last month after the end of disruptions from the worst snowstorms in half a century, two surveys showed.
The CLSA Purchasing Managers' Index rose to 54.4, the highest level in five months, from 52.8 in February, CLSA Asia-Pacific Markets said yesterday in an emailed statement. A separate PMI report, published by the China Federation of Logistics and Purchasing and the statistics bureau, showed the highest reading in almost a year.
Retail sales increased at the fastest pace in at least nine years in January and February, encouraging companies to boost production. The United States housing slump and a global credit shortage may cool exports, one of the key drivers of the world's fourth-biggest economy.
"Chinese manufacturing is revealed to be growing rapidly, mainly due to the strength of orders from the domestic economy," said Eric Fishwick, head of economic research at CLSA in Singapore.
Blizzards swept across provinces including Hunan, Hubei, Guizhou, Jiangxi and Anhui in January and February.
The CLSA index is based on replies to questionnaires sent to purchasing executives at more than 400 industrial companies. The survey tracks changes in output, new orders, employment, prices, inventories and delivery times. The data is seasonally adjusted.
"It was the insight into inflationary pressures that was most valuable," said Fishwick. "And worryingly, input, output and export price indices all hit record highs in March."
China's inflation surged to an 11-year high of 8.7 percent in February.
The output index rose to 55.6 in March from 53.2 in February, while the index of new orders climbed to 57.8 from 55.1. The index of export orders fell to 50.9 from 51.9.
In both the CLSA and government reports, a reading above 50 indicates an expansion and a reading below 50 a contraction. The government's PMI rose to 58.4 from 53.4 in February.
"The March number suggests companies are optimistic," Zhang Liqun, a senior research fellow at the State Council's Development Research Center, said. "There are actually a lot of uncertainties about future demand."
(Shanghai Daily April 2, 2008)
