As we navigate through the economic landscape of early 2023, the manufacturing sector has provided us with some encouraging signalsMarch's Purchasing Managers' Index (PMI) stood at 51.9%, slightly down from 52.6% in the previous month, reflecting a marginal decline of 0.7 percentage pointsNevertheless, the three-month average for the manufacturing PMI has reached 51.5%, which closely resembles the levels seen in the fourth quarter of 2020, suggesting persistent strength in the sector.

The composite PMI output index, an amalgamation of various economic activities, reached 56.9%, continuing on an upward trajectoryNotably, when comparing March 2023 to the same month in 2022, it is clear that the economy has improved significantly, given that the composite output PMI was lower in March 2022 compared to February

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This comparison, therefore, indicates that economic performance in March is likely to be superior to that of January and February.

Data from January to February shows that industrial output grew by 2.4% year-on-year, and the service production index increased by 5.5% for the same periodThese growth figures propel expectations for the first quarter GDP to approximately 4%, which diminishes the challenges faced in achieving a target of 5% growth for the year as a whole.

A closer look at the construction industry's health reveals a business activity index soaring to 65.6% in March, reflecting a 5.4 percentage point increase from the previous month, well above historical normsThis robust performance in construction can largely be attributed to the boost from infrastructure projectsAccording to insights from the National Bureau of Statistics, civil engineering has shown remarkable strength, with its business activity index surpassing 70%, highlighting infrastructure investment's stabilizing role

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Moreover, micro-level data further corroborate the enhanced activity in infrastructure, as evidenced by rising asphalt construction rates and increased cement usage for infrastructure projects in March.

The service sector also exhibited positive developments, with its business activity index climbing to 56.9% in March, outperforming both the previous month and the same period last year by 1.3 and 10.2 percentage points, respectivelyThis improvement is closely related to the ongoing recovery in offline gatherings and activitiesSpecific sectors within services—such as retail, transportation, rental and business services, and accommodation—showed indices surpassing the overall service sector figures, indicating a concurrent uptrend in real estate sales.

Within the information technology sector, operations during the first two months of 2023 remained stable

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Notably, software business revenue witnessed a robust year-on-year increase of 11%, while telecommunications revenue grew by 9.3%, outperforming many industrial firms, which saw a decline in revenue during the same periodThe positive trajectory for the information sector continues in March, with macroeconomic conditions improving, supportive policies aiding recovery, and innovation fostering growthThe service activity indices for telecommunications, internet, and software services have climbed above 60% after several months of operating below this threshold.

Despite the overall positive economic indicators, businesses have reported a lingering sense of insufficient demandFor the manufacturing industry, the new export orders index temporarily rebounded in February but fell again in March by 2 percentage pointsSurveys indicate that the proportion of firms citing weak market demand remains above 50%, with declining export growth identified as a key factor contributing to this sentiment.

In March, the expectations for business activity among manufacturers declined, slipping from 57.5% in February to 55.5% in March

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This downtrend is notable considering that prior to this, the manufacturing sector had seen consistent upward expectations since March 2020 without any substantial drop month-on-monthThe decline in expectations may suggest a cautious outlook among manufacturers amid fluctuating demand and ongoing global uncertainties.

March also recorded 50.4% for new export orders, still above the line that signifies growth versus contractionHowever, various indicators suggest that the export landscape is fraught with challengesIn the first 20 days of March, South Korea's export figures revealed a year-on-year decline of 17.4%, while Vietnam's exports were down by 13.19%. Compounding matters, China's export container freight rates have continued to fall throughout March, signaling further difficulties in the export sector.

The manufacturing price index for March was measured at 48.6%, below the threshold indicating growth