China's factory activity back to expanding in March

Chinese factory Image copyright AFP
Image caption Activity in China's factories expanded in March, but economists say the sector still remains weak

Activity in China's vast factory sector picked up unexpectedly in March, according to a government survey.

The official Purchasing Managers' Index (PMI) was up to 50.1 from February's 49.9, and higher than economists' forecasts of 49.7.

A reading above 50 points shows an expansion in activity in the sector, while one below indicates contraction.

China has cut interest rates twice since November among other measures to boost economic activity.

However, a private survey of the sector showed a much dimmer outlook, indicating that activity had contracted this month.

The final HSBC/Markit PMI came in at 49.6, slightly higher than a preliminary "flash" reading of 49.2 released earlier in March.

Weaker economy

Despite the contradicting surveys, economists said both continued to show the persistent weakness in the world's second-largest economy.

The Asian giant has been impacted by a downturn in its once red-hot property market, overcapacity in factory production and high levels of local debt, which contributed to growth of 7.4% in 2014 - a 24-year low.

Economists are now expecting growth to slow to around 7% this year.

On top of the manufacturing data, figures on China's services industry also added to concerns about slowing growth.

The official services PMI cooled in March, hovering around one-year lows.

The non-manufacturing index fell to 53.7 from February's 53.9, at the one-year low hit in January.

The service sector, which was expanding strongly last year while manufacturing struggled, accounted for over 48% of the economy in 2014, up from about 47% in 2013, according to Reuters.

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