The March Sales Managers Survey shows a continuation of the rapid recovery of economic activity seen in February. Covid related problems haven't entirely vanished: 37% of Chinese companies surveyed said they remained negatively impacted by Covid in one way or another, but the percentage fell sharply again from 45% in February and 55% in January.
March data shows the Services sector leading the pack, with a month on month jump in the Sales Growth Index from an already impressive reading of 55.7 in February, to an 18 month high of 56.2 in March.
China Services Sales Growth Index
Diffusion Index. (50 = 'No Growth')
The All-Sector Sales Growth Index is now up at 54.6, a 16 month high. Manufacturing is showing a somewhat slower recovery, as might be expected, but is not so far behind with the Sales Growth Index up at a healthy 53.3 reading.
The data suggests there is little doubt that the Chinese economy isn't yet back to pre Covid normality, but both Manufacturing and Services sectors are experiencing rapidly rising activity levels. Although early days to be absolutely sure of the absolute size of this recovery, the March data does provide strong evidence that China is recovering from Covid much faster than expected by most analysts.
In conclusion, the rapid changes made in Covid policy from early December by the Chinese Government do appear to be releasing a wave of long suppressed energy, despite the continuing supply problems associated with the long lock down period.
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