BEIJING: Surveys of China's manufacturing and services sectors showed persistent weakness in the world's second-biggest economy in March, adding to bets that Beijing will have to roll out more policy support to avert a sharper slowdown.
The official Purchasing Managers' Index (PMI), released by the National Bureau of Statistics on Wednesday, edged up to 50.1 in March from February's 49.9.
Although that was stronger than 49.7 predicted by analysts in a Reuters poll, it was barely above the 50-point level that separates an expansion in activity from a contraction, suggesting factory activity remains tepid at best.
In another sign that businesses faced lackluster demand, a separate survey of China's services sector showed the official non-manufacturing PMI fell to 53.7 from February's 53.9, hugging a one-year low of 53.7 struck in January.
"Demand in local and foreign markers remained on the soft side, so manufacturing businesses faced a degree of downward pressure," said Zhao Qinghe, a senior analyst at a research center linked to the statistics bureau.
The services sector was the lone bright spot in China's slowing economy last year, expanding strongly and creating more jobs even as activity in the factory sector fizzled.
But activity readings have been uneven in recent months, hurt in part by a sagging housing market, raising concerns that service companies may be finally succumbing to the broader economic downdraft.
Indeed, a separate private survey of China's manufacturing sector showed on Wednesday that it contracted in March after two months of recovery.
The final HSBC/Market China Manufacturing PMI came in at 49.6, slightly higher than a preliminary "flash" reading of 49.2 but still below 50.
The official factory survey looks at larger, state-owned firms, while the HSBC version focus on small and mid-sized firms which are facing greater stresses such as high financing costs.
Other data so far this year have indicated that the economy has lost momentum despite two interest rate cuts since November, a reduction in the amount of money banks must keep in reserve and repeated attempts by the central bank to reduce financing costs.
Weighed down by a property downturn, factory overcapacity and high levels of local debt, China's economic growth is expected to slow to a quarter-century low of around 7 percent this year from 7.4 percent in 2014.
Some economists expect first-quarter economic growth to dip below 7 percent, which could be weakest since the first quarter of 2009, when growth slowed sharply to 6.6 percent.- Reuters
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