Staff members assemble a planter at the workshop of an agricultural machinery manufacturing enterprise in Jiamusi, northeast China's Heilongjiang Province, March 13, 2024. [Photo/Xinhua]

China's factory activity expanded in March after five consecutive months of contraction as enterprises reported recovery in production and demand and showed optimism in business outlook.

The purchasing managers' index (PMI) for China's manufacturing sector was 50.8 in March, bouncing back to the expansion zone from 49.1 in February, the National Bureau of Statistics (NBS) said Sunday.

A reading above 50 indicates expansion, while a reading below 50 reflects contraction.

Zhang Liqun, a special analyst with the China Federation of Logistics and Purchasing, said the significant rebound in March PMI reflected both the impact of seasonal factors and the recovery momentum of the overall macroeconomy. He also highlighted that multiple policies aimed at stabilizing growth and boosting market confidence this year are gradually taking effect.

Among the 21 surveyed sectors, 15 were in the expansion zone in March, up by 10 from the previous month, as enterprises accelerated production after the Spring Festival holiday.

The sub-index for production in the manufacturing sector rose from 49.8 to 52.2 in March, while the sub-index measuring the number of new orders increased from 49 to 53, indicating a robust recovery in both production and demand.

The increase in exports and imports was another bright spot for the manufacturing sector. Companies in sectors including chemical fiber, automobile, and communication devices reported improving foreign trade businesses compared with a month earlier.

Companies of varying sizes all saw improvements in production and operation this month. Small-size enterprises saw their PMI return above the boom-and-bust line for the first time in 12 months, while the PMI for large enterprises rose to 51.1 from 50.4.

The business outlook continued to improve, with companies in sectors such as food and beverage, and electrical machinery, upbeat about recent developments.

Sunday's data also revealed that non-manufacturing activity, specifically in services and the construction sector, continued its growth momentum in previous months, with its PMI coming in at 53 in March, up from 51.4 in February.

Experts said that the recovery of PMI, along with the improvements in other crucial economic indicators, reflected that the Chinese economy continued to recover steadily, with market expectations improving and growth impetus strengthening.

However, they also cautioned against some pressing challenges facing enterprise production and operation, such as increasingly fierce market competition and a lack of demand.

NBS senior statistician Zhao Qinghe called for promoting the implementation of policies such as large-scale equipment upgrades and trade-ins of consumer goods to provide solid support for the growth of China's manufacturing sector.