(Yicai) March. 31 -- Activity in China’s manufacturing sector expanded at the swiftest pace in a year this month, as production rebounded from the Chinese New Year holiday that ended in early February, while the non-manufacturing sector posted its highest reading in three months.

The manufacturing purchasing managers' index climbed to 50.5 for March from 50.2 last month, marking the second straight month of growth, according to data the National Bureau of Statistics released today. A PMI above 50 signals expansion.

The production and business expectations sub-index slid 0.7 percentage point to 53.8 percent, while remaining near 54 percent for the sixth consecutive month, reflecting ongoing optimism.

The higher manufacturing PMI suggests a clearer economic recovery, said Zhang Liqun, an analyst at the China Federation of Logistics and Purchasing. But oversupply remains a key challenge, with more than 60 percent of the firms surveyed saying insufficient demand is their main concern, Zhang said.

The drop in production and business expectations also suggests that businesses are hesitant to fully resume operations, Zhang noted, adding that counter-cyclical economic policies, particularly higher government investment in public goods, need to go on being beefed up to reverse contracting demand.

Wen Tao, a logistics expert, pointed out that the rise in the PMI reflects expanding supply and demand, as well as a steadying environment for small and medium-sized enterprises. Looking ahead, the manufacturing industry is expected to maintain steady growth in the second quarter, he said.

Beyond manufacturing, other sectors also saw faster growth this month. The non-manufacturing business activity index, or non-manufacturing PMI, rose to 50.8 from 50.4 in February. Activity in the construction industry rose 0.7 point to 53.4 percent, while services edged up 0.3 point to 50.3 percent.

The composite PMI output index, which combines the production sub-index of the manufacturing PMI and the non-manufacturing PMI, rose 0.3 point to 51.4, indicating faster cross-sectoral growth.

Editor: Emmi Laine