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China's Manufacturing Growth Moderates In March

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China's manufacturing sector growth moderated in March suggesting that the post-epidemic recovery was continuing to falter, survey results from IHS Markit showed on Thursday.

The Caixin factory Purchasing Managers' Index fell to 50.6 in March from 50.9 in the previous month. This was the lowest reading since April 2020. Nonetheless, a score above 50 indicates expansion in the sector.

Chinese manufacturers raised their production in March but the rate of growth edged down to an 11-month low. At the same time, total new work expanded at a fractionally weaker pace. New export business returned to growth, as global economic conditions continued to recover.

The sustained upturn in new orders led to renewed pressure on capacities, with backlogs of work rising moderately after a marginal drop in February. Further, the rate of job shedding eased to a marginal pace.

Despite easing of supply chain disruption, firms reported a sharp and accelerated rise in input costs in March amid reports of greater raw material prices. Consequently, firms raised their selling prices and at the most marked rate since November 2016.

The growing inflationary pressure limits the room for future policies and is not a good thing for sustaining an economic recovery in the postepidemic period, Wang Zhe, a senior economist at Caixin Insight Group said.

Looking ahead, manufacturers were highly confident that output would continue to rise over the next year, with the level of positive sentiment among the highest seen over the past seven years.

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