The factory of the world is firing up again: China records strong growth in manufacturing activity for March

Whilst economies around the world are still on their knees, China seems to have picked itself back up again, after emerging from the worst of Covid-19’s destruction across the country.

In battling the virus throughout February, the Chinese economy took a huge hit. Strict quarantine measures imposed across the country by the central government, effectively put 1.4 billion people in lockdown, resulting in a massive decline in manufacturing output.

Factory activity in China is released by the National Bureau of Statistics (NBS) each month using a measurement called the Purchasing Managers Index (PMI). This is essentially a number, which summarises the results of a survey which is sent out to over 700 manufacturing enterprises all over China.

The survey assesses the purchasing activities and supply situations of the manufacturing sector and the results give a strong indication of how factory activity compares to the month before. A PMI value above 50 indicates growth in manufacturing activity, where a value below 50 indicates a decline in output.

In February this year, as the Chinese economy was devasted by the spread of Covid-19, a PMI of 35.7 was recorded, the worst decline in manufacturing since the measurement was put into use.

With many factories still closed throughout most of March, and many parts of the country still in lockdown, economists did not expect such a strong rebound this month. PMI for March however came in at 52, which indicates that manufacturing activity expanded month-on-month and the recovery has begun.