China's manufacturing sector expanded at the fastest pace in four months in March as output accelerated on the back of a sustained improvement in new orders, survey data from S&P Global revealed Tuesday.
The headline Caixin Purchasing Managers' Index rose to 51.2 in March from 50.8 in February.
The index marked the sixth consecutive month in which the score has remained above 50.0 mark signaling expansion in the sector.
Production growth advanced for a third straight month, driven by higher new orders. Better demand conditions, alongside successful business development efforts and the launch of new products, underpinned the latest uptick in new business inflows.
There was further accumulation of backlogged work in March. The level of unfinished business increased across the manufacturing sector. To cope with rising workloads, firms hired additional staff. Consequently, staffing increased for the first time since August 2023.
Purchasing activity grew at an accelerated pace to meet production requirements. Firms ramped up their pre-production inventory holdings as lead time for inputs deteriorated.
By contrast, post production inventories decreased for a second straight month as finished goods were shipped out for order fulfillment.
Regarding prices, the survey showed that average input prices declined for the first time in six months. As a result, manufacturers reduced their factory gate prices.
Confidence among manufacturers remained positive in March as firms were hopeful that the introduction of new products and promotional efforts would boost sales and output in the next 12 months.