On March 31st, data released by the Service Industry Survey Center of the National Bureau of Statistics and the China Federation of Logistics and Purchasing showed that in March, the Purchasing Managers' Index, Non Manufacturing Business Activity Index, and Comprehensive PMI Output Index of the manufacturing industry were 50.5%, 50.8%, and 51.4%, respectively, an increase of 0.3, 0.4, and 0.3 percentage points from the previous month. Among them, the manufacturing PMI hit a nearly one-year high since April 2024. Zhao Qinghe, senior statistician at the Service Industry Survey Center of the National Bureau of Statistics, said that in March, the influence of the Spring Festival gradually subsided, and the production and operation activities of enterprises accelerated. The three major indexes continued to rise in the expansion range, and China's economy as a whole maintained expansion. The manufacturing industry is steadily improving, with coordinated growth between supply and demand. In March, the manufacturing PMI was 50.5%, an increase of 0.3 percentage points from the previous month, and has been operating in the expansion range for two consecutive months. The changes in sub indices show that the manufacturing industry is operating steadily and positively, with coordinated growth between supply and demand. New driving forces are rapidly increasing, large enterprises are maintaining their upward momentum, and small and medium-sized enterprises are stabilizing their operations. After the comprehensive disappearance of the impact of the Spring Festival, production activities will further return to normal, and the index itself will have a seasonal rebound process Wang Qing, Chief Macro Analyst of Dongfang Jincheng, stated in an interview with China Net Finance reporters that "in the past 10 years (excluding the 3 years of the epidemic), the manufacturing PMI index in March has risen by 8 and fallen by 2." In March, the government work report of the "Two Sessions" released a signal of stable growth. At the same time, the previous package of incremental policies still has a certain continuing effect in promoting consumption and stabilizing investment. In Wang Qing's view, this is mainly reflected in the 0.7 percentage point increase in the new orders index in March, reaching 51.8%, which means that expanding domestic demand has become the main driving force for the overall PMI index to rise in the month. It is worth mentioning that the new export order index in March increased by 0.4 percentage points to 49.0%, higher than the historical average of 48.1% in the past decade. On the one hand, it indicates that the current external demand still has strong resilience, and on the other hand, it also shows that the impact of changes in the external economic and trade environment on China's exports is not yet obvious. Wang Qing predicts that exports are expected to continue to maintain positive growth in March. The accelerated growth on the demand side has also boosted the production willingness of enterprises, with a production index of 52.6%, an increase of 0.1 percentage points from the previous month, and running above 52% for two consecutive months. Overall, in March, the supply and demand sides continued to grow in synergy for two consecutive months, and the economic scale steadily expanded China Logistics Information Center analyst Wen Tao said. In March, China's deepening implementation of the innovation driven development strategy continued to achieve results, with new driving forces rapidly rising. The PMI for equipment manufacturing and high-tech manufacturing in March was 52.0% and 52.3% respectively, an increase of 1.2 and 1.4 percentage points from the previous month. The former is mainly related to the increased support policies for large-scale equipment updates, while the latter is mainly driven by the strong growth momentum of new energy vehicles and other new driving forces, indicating that the new quality productivity represented by high-tech manufacturing industry maintains rapid development Wang Qing said. It is worth noting that, driven by events such as the release of DeepSeek's AI big model, the prosperity of strategic emerging industries (EPMI) significantly increased in March, which has a certain impact on the overall manufacturing PMI index. In addition, the prosperity of enterprises varies. The PMI of large enterprises fell 1.3 percentage points to 51.2% in March. But the PMI of medium-sized enterprises rose by 0.7 percentage points to 49.9%, the highest level so far this year; The small business PMI rose 3.3 percentage points to 49.6%, the highest level since May last year. The improvement of the prosperity of small and medium-sized enterprises is inferred to be related to the gradual implementation of measures to support private enterprises Wen Bin, Chief Economist of Minsheng Bank, stated. Non manufacturing business activities continue to expand, with both investment and consumption showing signs of improvement. In March, the non manufacturing business activity index was 50.8%, up 0.4 percentage points from the previous month, marking the second consecutive month of month on month increase, with a slight expansion in growth compared to the previous month. The continuous operation in the first quarter exceeded 50%, indicating that non manufacturing business activities continued to expand in the first quarter, and the growth rate showed a slight acceleration trend month by month Wu Wei, an economist at China Logistics Information Center, said. Among them, the business activity index of the service industry in March was 50.3%, up 0.3 percentage points month on month, stronger than the same period before the epidemic and last month, and the improvement momentum slightly accelerated. In terms of sub items, the new order index in March rebounded by 1.2 percentage points from the previous month to 47.1%, the business activity expectation index rebounded by 0.6 percentage points to 57.5%, and the employee index fell by 0.2 percentage points to 46.5%. By industry, the business activity index of industries such as water transportation, air transportation, postal services, telecommunications, broadcasting and television, satellite transmission services, and monetary and financial services are all in the high prosperity range of over 55.0%. As the Spring Festival effect gradually fades, the business activity index of industries related to residents' consumption, such as catering, ecological protection and public facility management, culture, sports and entertainment, has declined. In Wang Qing's view, there are two reasons for the rise in the PMI index of the service industry. Firstly, the intensification of consumption promotion policies has led to moderate offline consumption activities among residents and an increase in the retail business activity index; Second, driven by the release of DeepSeek's AI model, the business activity index of the Internet and software information technology service industry rose to more than 53% in March. In March, with the warming weather and continued release of investment related demand, construction activities in the construction industry continued to rise. The business activity index of the construction industry was 53.4%, rising for two consecutive months on a month on month basis, reaching a new high since June 2024. In March, both housing construction and civil engineering construction activities continued to expand. At the beginning of the year, there was an increase in infrastructure investment, and the policy continued to emphasize the guarantee of delivery of buildings, which supported the prosperity of the construction industry Wang Qing pointed out. Overall, Wang Qing believes that the manufacturing PMI index continued to rise in the expansion range in March, reflecting the dual effects of seasonal recovery and the effective implementation of stable growth policies, indicating a continued strong macroeconomic trend in the first quarter. He expects the GDP in the first quarter to be around 5.0% to 5.2% year-on-year. Looking ahead, Wang Qing believes that the manufacturing PMI index in April may experience a certain degree of decline, and there is a possibility that it may once again fall near the balance line between prosperity and decline. This means that macroeconomic policies will increase their impact in the future. The window for interest rate cuts and reserve requirement ratio cuts in the second quarter may reopen. In Wen Bin's view, since the beginning of the year, China's economy has started to operate steadily. The improvement in the construction and manufacturing industries in the first quarter was better than the historical average, but the service industry was slightly weaker. It is expected that the GDP growth rate in the first quarter will remain above 5.0%. However, from March, the recovery momentum of the construction and manufacturing industries has weakened, and the follow-up policies need to be implemented as soon as possible. (New Society)