Earliest China Data Show Strong March Activity, Brighter OutlookBloomberg News
Five private indicators have increased from previous levels
Sentiment improving for small businesses and sales managers
China’s economy is strengthening and the future looking brighter, according to the freshest readings from small domestic businesses and global financial professionals alike.
Sales manager sentiment and confidence of small- and medium-sized enterprises jumped to the highest in almost two years, according to earliest private indicators for March. International market experts see a significantly stronger outlook and a gauge of manufacturing activity based on satellite imagery remains robust.
Momentum across the world’s No. 2 economy has been rebounding since late last year as producer prices surged, industrial output picked up and property prices strengthened. That gives breathing room to policy makers looking to reduce the nation’s high leverage.
Here’s what the earliest indicators show:
A survey of global financial market experts shows their outlook for the economy continues to improve. So says the China Economic Panel, a joint project of The Centre for European Economic Research (ZEW) in Mannheim, Germany, and Fudan University in Shanghai.
The reading for expectations over the coming year surged to 14.5 from minus 4.2 in February, while the gauge for the current situation slipped to 3.3 from 4.3 last month. The survey tracks the percentage of positive answers minus percentage of negative answers.
The China Satellite Manufacturing Index indicates factories are still chugging along, with one of the best readings in the past five years. It rose to 51.8 from 51.1 in February, according to San Francisco-based SpaceKnow Inc., which uses commercial satellite imagery to monitor activity across thousands of industrial sites. Readings above 50 signal improving conditions.
The official purchasing managers index probably matched a post-2012 high, edging up to 51.7 from 51.6 in February, according to economists surveyed by Bloomberg as of Sunday. The National Bureau of Statistics is releasing the factory gauge early in March, moving to the last day of the current month from the first day of the following month.
Standard Chartered Plc’s Small and Medium Enterprise Confidence Index rebounded to 60 this month, the highest in almost two years. Sub-indexes tracking sales, production and profitability all strengthened, while the outlook for investment softened, according to a report by economists Yan Se and Ding Shuang at the bank.
While investment is likely to remain strong in coming months, smaller businesses aren’t sure about the sustainability of the robust recovery, Yan said by email. "Many people believe this is a temporary one, and the economy may still have downward pressure," he said.
A survey-based gauge of sales manager sentiment picked up to a 20-month high of 52.2 this month. Business confidence continues to grow and "improving sentiment is being vindicated by solid sales and market growth," World Economics Ltd. analysts wrote in a report.
The S&P Global Platts China Steel Sentiment Index jumped to 49.19 in March from 25.21 last month. The gauge is based on a survey of about 75 to 90 China-based market participants including traders and steel mills.
Higher prices are spurring an uptick in steel production, Paul Bartholomew, a senior managing editor at S&P Global Platts in Melbourne, wrote in a release. "It remains to be seen if domestic demand is strong enough to absorb the additional output."
— With assistance by Xiaoqing Pi