China's factory activity is expected to have picked up slightly in March, a Reuters poll showed, in a rare piece of good news, though the figure is unlikely to alter views that the world's second-largest economy is facing a slow first quarter. China's official manufacturing purchasing managers' index (PMI) may rise to 50.3 from February's 50.2, according to the median forecast of 14 economists. That would still be below January's 50.5, but above the 50 line that separates expanding activity from a contraction.
The figure would come amid a string of weak economic indicators so far this year, including shrinking exports and slowing growth in industrial output and fixed-asset investment, that have reinforced concerns about a slowdown.
"The headline official PMI tends to be strong in March," said Louis Kuijs, chief China economist at the Royal Bank of Scotland.
"Based on the seasonal patterns that we've observed in recent years, this suggests that, in underlying terms, there was a slight further moderation of growth in March," he said, adding that he usually subtracts 0.3 from the March PMI reading to adjust for seasonal distortions. That means the March figure would be weaker than February.
The recent weak data has stirred speculation of a government stimulus package to tide the economy over a slowdown in the first quarter. Some analysts say the only way China can keep growth in line with its 2014 target of around 7.5 percent is through stimulus.
Premier Li Keqiang told a forum in north-east China earlier this week that the government was prepared for economic volatility this year and could roll out targeted measures, according to a state media report on Friday.
"Potential growth is 6 percent. Without a stimulus you cannot make (the government target)," said Dariusz Kowalczyk, senior economist at Credit Agricole CIB in Hong Kong.
He added that signs of a pending stimulus over the past two weeks may have helped buoy the March PMI.
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