(Yicai Global) April 4 -- Activity in China’s manufacturing sector fell last month after expanding in February for the first time in seven months, according to the findings of a widely watched private survey.

The Caixin manufacturing purchasing managers’ index came in at 50 for March, down from 51.6 the month before, data released yesterday by financial media group Caixin showed. Fifty is the dividing line between expansion and contraction.

The foundations of the economic recovery are not yet solid, said Wang Zhe, senior economist at Caixin Insight Group. Growth will still rely on boosting domestic demand, especially improving household consumption, he added.

The official manufacturing PMI, published by the National Bureau of Statistics on March 31, fell 0.7 point to 51.9 in March from the previous month, remaining in expansion territory for the third consecutive month. 

The Caixin manufacturing production and new order sub-indexes fell in March, but remained just above 50. Some businesses indicated that due to the liberalization of China’s Covid-19 prevention and control measures, customer demand and quantity have picked up, while others said sales were relatively weak, especially overseas orders.

The employment sub-index fell below 50. The number of employed people declined mainly because vacancies were not filled after workers left their jobs and companies laid off staff to cut costs.

The manufacturing supply chain continued to recover, as the supplier delivery time sub-index fell stayed in expansion territory despite falling.

But corporate confidence remained high, as many firms expect their operations to recover further this year. The confidence index fell from February’s nearly two-year high, but stayed above the long-term average. Increasing demand, surging customer numbers, and new product development underpin the industry’s growth expectations.

Editor: Futura Costaglione