Investing.com - China's Caixin manufacturing PMI came in better than expected, but shy of expansion territory reached by an earlier released CFLP PMI on Friday, with both results aiding sentiment.
The Caixin manufacturing PMI for March came in at 49.7, better than the level of 48.2 seen and 48.0 for the final in February. A level below 50 denotes contraction.
"All categories of the index showed improvement over the previous month. The output and new-order categories rose above the neutral 50-point level indicating that the stimulus policies the government has implemented have begun to take hold. However, considering that current conditions remain uncertain, the government needs to continue with moderate stimulus measures to reinforce market confidence," Caixin Insight Group chief economist He Fan said.
Earlier, the March CFLP manufacturing gauge in China rose into expansion territory on Friday, surprising on the upside and setting the stage for a more closely-watched measure. The February figures were affected by a week-long holiday in the month to mark the Chinese New Year.
The semi-official CFLP manufacturing PMI for March came in at 50.2, compared to 49.3 seen and a final 49 in February, representing the first gain above 50 in eight months and its strongest since 50.3 in November 2014. March is typically a period of strong business activity in China because construction resumes. The CFLP non-manufacturing index came in at 53.8, compared to 52.7 for the final in February.
"Today's better-than-expected PMI readings are consistent with our long-held view that policy easing will result in a cyclical upturn in China’s economy this year," Capital Economics said in a note to clients.
"The main components of both manufacturing PMIs all rose last month, with the biggest increases in the new orders components. This appears to reflect an improvement in both domestic and external demand, with the export orders sub-indices also rising though by a smaller margin."
Capital economics added that "the improvement in all three PMIs is likely to have been partly seasonal given that disruptions from Chinese New Year faded last month ... But the increases last month appear too large to be entirely seasonal and do suggest that recent stimulus measures are now gaining more traction."