The activity of factories in China in March increases unexpectedly and exceeds expectations

BEIJING (Reuters) – An official survey on Sunday revealed that factory activity in China had unexpectedly increased for the first time in four months in March, suggesting that government stimulus could begin to take shape.

The official PMI rose to 50.5 in March from 49.2 in February, its lowest level in three years, according to statistics office data. The mark of 50 points separates the expansion of the contraction on a monthly basis.

Analysts polled by Reuters were expecting an index of 49.5, up slightly from February.

China's economic growth has slowed to reach its lowest for almost three decades in 2018 and badysts expect a further slowdown in the coming months before the start of a series of stimulus measures. Beijing is targeting economic growth of 6.0 to 6.5 percent this year.

The government has announced additional spending for roads, railways and ports, as well as tax cuts of nearly 2 trillion yuan ($ 297.27 billion) in order to lighten soft balance sheets of companies and limit job losses.