China's official Manufacturing Purchasing Managers' Index (PMI) rose to 50.4 in March, marking a return to expansion after two consecutive months of contraction, with previous readings at 49.3 in January and 49.0 in February [2]. This figure exceeded both market estimates of 50.1 and the consensus in a Reuters poll [1][2]. The Non-Manufacturing PMI also climbed to 50.1 in March, up from 49.5 in February, beating the market consensus of 49.9 [1]. According to the National Bureau of Statistics, this rebound represents the strongest performance in manufacturing activity in a year [2].
The market reaction was positive, with the AUD/USD pair trading higher near 0.6875, up 0.30% on the day, reflecting optimism about China's economic outlook [1]. In addition, China's exports surged 21.8% year-on-year in the first two months of 2026, driven by robust demand from Southeast Asia and Europe, which offset weaker shipments to the U.S. [2].
Looking ahead, a separate private-survey PMI conducted by RatingDog and S&P Global is expected to be released on Wednesday. According to a Reuters poll, this PMI is anticipated to drop to 51.6 in March from a five-year high of 52.1 in February [2].
The sharp rebound in both manufacturing and non-manufacturing PMIs, along with strong export data, signals renewed momentum in China's economy. However, analysts are watching the upcoming private PMI release for further confirmation of the recovery trend [2].
CONCLUSION
China's manufacturing and non-manufacturing sectors returned to expansion in March, surpassing market expectations and boosting investor sentiment. The strong PMI readings and robust export growth suggest improving economic conditions, with markets responding positively. Further clarity on the recovery will come with the release of the private PMI survey.