China's manufacturing sector returns to growth

Published on: April 8, 2019 / Updated on: April 8, 2019 – Author: Konrad Wolfenstein

Caixin Manufacturing Purchasing Managers Index released last Monday . The positive turnaround comes after the government announced an initiative to stimulate the economy by increasing spending, cutting taxes, and opening up more opportunities to foreign companies.

When the index is above 50, it indicates that the sector is growing. Readings below 50 signal contraction. The official government PMI, published on Sunday, also rose again above the important 50-point mark. The government PMI considers only large manufacturers, while the Caixin index includes small and medium-sized enterprises.

China recorded its slowest economic growth in 28 years in 2018, and despite positive news from the manufacturing sector, a further slowdown in growth is expected.

After a few months of contraction, China's manufacturing sector was unexpectedly growing again in March, according to the Caixin Manufacturing Purchasing Managers Index released Monday last week. The positive change comes after the government announced it was starting an initiative attempting to boost the economy by increasing spending, cutting taxes and opening up more opportunity to foreign firms.

Whenever the index reads above 50, it indicates that the sector is growing. Readings below 50 signal a contraction. The official government PMI, which was released Sunday, also rose above the important 50 points mark again. The government PMI is only looking at larger manufacturers, while the Caixin Index considers small and medium-sized enterprises.

China reported the slowest economic growth in 28 years in 2018, with growth expected to slow further despite the positive news from the manufacturing sector.

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