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China’s manufacturing sector saw activity climb to the highest level since 2012 in March as an official gauge showed factories ceased shedding jobs for the first time in nearly five years and a previously severe contraction at smaller enterprises softened markedly.

The official purchasing managers’ index for China’s manufacturing sector came in at 51.8 in March according to the National Bureau of Statistics, notching a slight rise from 51.6 in February and climbing further above the 50-point mark separating growth from contraction. A median forecast from economists surveyed by Reuters predicted the gauge would hold steady from the previous month.

A sub-index tracking output climbed half a percentage point to 54.2, while that for new orders rose slightly to 53.3 as new export orders notched a similar increase to 51, suggesting continued – if mild – improvement in external demand. However, a sub-index for input prices declined almost 5 points from February’s level to 59.3.

A gauge of employment trends held the most positive news for the sector as it hit the 50-point mark, indicating neither expansion nor contraction. That marked the first time the manufacturing sector reported having not shed jobs on a monthly basis since May 2012.

Conditions at the biggest manufacturers remained steady, with a sub-index tracking large-scale companies holding at 53.3. But conditions at small enterprises – which have been the sector’s hardest hit during the slowdown in economic growth over the last few years – improved markedly as contraction softened more than 2 points to 48.6.

The services industry’s straits appeared to improve as well, with a sub-index for the sector rising one full percentage point to 54.2, a two-year high. A broader gauge of growth for all non-manufacturing activity rebounded from a February dip to reach 55.1, marking the gauge’s highest level since May 2014.

A hint as to one driving factor in the broader rebound came courtesy of a sub-index for construction activity, which rose in March for the first time in two months – albeit by 0.4 percentage points – to 60.5.

That drives home the centrality of China’s real estate sector to the country’s overall economic growth. The latest readings also track with recent movement by both the FTCR China Real Estate Index and the broader FTCR China Business Activity Index.

The independent Caixin manufacturing PMI, which provides a useful cross-check on the official gauge and focuses more on smaller and private businesses, is due out on Sunday. Caixin’s services PMI is scheduled for release on Thursday.

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