China manufacturing PMI returns to growth, strongest in a year

China’s official manufacturing indicator returned to expansion in March as the purchasing managers index (PMI) surprised markets by moving above the 50 threshold.

The National Bureau of Statistics (NBS) reported the manufacturing PMI at 50.8 in March, up from 49.1 in February, snapping a two-month run of contraction. The private Caixin/S&P Global PMI also showed robust activity, rising to 51.1 and marking the strongest pace in roughly a year, driven by higher new orders both domestically and from abroad.

Market reaction was muted-to-positive: Chinese equities edged higher while bond and currency markets showed limited movement as investors balanced the upbeat data against lingering policy and geopolitical risks. The PMI surprise supported risk appetite in the near term but did not trigger broad risk-on moves.

The readings add to signs that fiscal and liquidity support from Beijing is feeding into industrial activity, and that external demand is showing pockets of recovery. Still, reputable forecasters caution that the bounce could be partially policy-driven and temporary; a sustained recovery would require broader gains in investment, consumption and employment.

Analysts expect the near-term outlook to feature continued, if uneven, improvement in manufacturing, with policy signals and global trade dynamics shaping the trajectory. Investors will watch upcoming activity data, trade flows and any further fiscal or monetary measures from Chinese authorities to assess whether March’s strength represents a durable turning point.