HONG KONG (MarketWatch) — Business conditions for Chinese manufacturers saw further improvement in March after nearly leveling off in the previous month, according to preliminary data released Thursday by HSBC.
The so-called flash manufacturing Purchasing Managers’ Index (PMI) for March came in at 51.7, improving from a final reading of 50.4 for February.
A measure above 50 indicates expansion, and the latest data implied that the Chinese economy was still on track for a gradual growth recovery, according to HSBC’s chief China economist Hongbin Qu.
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“Inflation remains well behaved, leaving room for Beijing to keep policy relatively accommodative in a bid to sustain growth recovery,” Qu said.
The improvement came as factory output and new domestic and export orders accelerated in March from levels seen in February.
Mainland Chinese and Hong Kong stocks, which began the day’s trade on a tentative note, moved to solid gains after the data release. The Hang Seng Index HK:HSI -0.14% rose 0.7%, while the Shanghai Composite Index CN:000001 +0.30% climbed 0.4%.
The increase in the March PMI figure could help ease market worries about a weaker-than-expected recovery, said BofA Merrill Lynch economist Ting Lu.
However, “there are significant distortions on PMI readings around the Lunar New Year holiday, so investors should view those volatilities in PMI with caution,” Lu said.