China's economic recovery just ticked up another notch

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If the early indicators are anything to go by, China’s economy continued to perform strongly in March.

The government’s official manufacturing Purchasing Managers Index (PMI) rose to 51.8 in March from 51.6 in February, leaving it sitting at the highest level since April 2012.

The PMI measures changes in activity levels across China’s manufacturing sector from one month to the next, and ranges from a score of 0 to 100. 50 is deemed neutral, with anything above this level indicating that activity levels improved. A reading below 50 suggests activity levels declined. The distance from 50 indicates how quickly activity levels improved or declined compared to a month earlier.

So, at 51.8, activity levels not only improved, they did so at a faster pace.

That suggests that the momentum built over the second half of 2016 is now strengthening in early 2017.

By size of manufacturer, larger firms continued to outperform their smaller peers.

China’s National Bureau of Statistics (NBS) said that the PMI for large firms held steady at 53.3, while that for medium-sized manufacturers fell 0.1 percentage point to 50.4.

While large and medium-sized firms continued to see activity levels expand, smaller manufacturers continued to struggle with their PMI coming in at 48.6. That was up 2.2 points from February, but still signals that activity levels declined.

The NBS said that the PMI for high-tech manufacturers jumped to 54.2, up 2.4 points from a month earlier.

By subindex, the production measure rose by 0.5 points to 54.2, indicating that production levels grew at a faster pace than February.

New orders and new export orders also grew at a faster pace than a month earlier, while firms held staffing levels unchanged after several years of job-shedding.

Purchases of raw materials grew at a slightly slower pace, coming in at 59.3 from 64.2 in February. Still rapid, but slower nonetheless.

And it wasn’t just the nation’s factories that were performing well in March.

The separate non-manufacturing PMI — measuring activity levels in other sectors of the economy including construction — also strengthened smartly, rising to 55.1 in March, up from 54.2 in February.

That marked the fastest improvement in activity levels since May 2014.

The NBS said that PMIs for individual sectors such as retail trade, air transport, information technology, and monetary and financial services all came in above the 55.0 level.

And there was no sign that construction activity is cooling.

“The expansion of the construction industry has accelerated,” the NBS said, noting that the PMI measuring business activity was 60.5, up 0.4 points on February.

Truly rapid.

Individual PMIs measuring housing construction and civil engineering activity levels came in at 61.5 and 60.6 respectively.

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