China's private sector returned to expansion territory unexpectedly in March despite the outbreak of coronavirus weighing on economic activity, official survey data showed Tuesday.

The composite output index climbed to 53.0 from 28.9 a month ago, survey results published by the National Bureau of Statistics showed Tuesday. A score above 50 indicates expansion.

The manufacturing Purchasing Managers' Index rose sharply to 52.0 from 35.7 in February. The reading was expected to rise to 44.8.

Likewise, the non-manufacturing PMI advanced 22.7 points to 52.3 in the previous month. Economists had forecast the reading to climb to 42.0.

The NBS said improvement largely reflects the low base effect compared to February. Factories largely resumed operations but it does not mean that the actual production returned to pre epidemic level.

The statistical office noted that the spread of virus globally has hit trade and bring severe challenges to the Chinese economy.

That improvement in PMI could be brief as these are month-on-month comparisons for survey respondents, Iris Pang, an ING economist said. But for the time being the data provide some strength to the yuan.

The ING economist noted that PMI survey asks respondents their views on a monthly comparison so the next set of PMI survey results could point to a fall in activity again in April when compared to March.

It is worth highlighting that the technology war and the trade war can also return once the US gets on top of its own Covid-19 problems, she added.

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