By Kristy Dorsey

Economic activity in China rebounded sharply during March from the previous month’s record lows, offering a glimmer of hope that a V-shaped recovery can be achieved in other parts of the world when the Covid-19 pandemic is brought under control.

However, experts have cautioned that the world’s second-largest economy has not yet returned to full throttle, and is facing further headwinds. Chief among these is slumping demand for its goods in countries where the virus more recently started taking hold.

For manufacturing, the official Purchasing Managers’ Index rose to 52, up from a record low of 35.7 in February and ahead of the consensus estimate of 45. Anything above the 50 mark signals expansion, with that below denoting economic contraction.

For non-manufactured goods, the March PMI jumped to 52.3 against the previous month’s reading of 29.6. Economists had been expecting a figure of 42.1.

Mihir Kapadia, chief executive of Sun Global Investments, said there remains long months of battle in Europe and the US where the pandemic is “far from over”.

“Global economic growth and trade will continue to be affected until the disease is contained across the world,” he said. “But as China shows, there is hope at the end of the tunnel.”

The best-case scenario for the UK is a V-shaped recession, with an abrupt downturn followed by an equally sharp recovery as activity quickly resumes post-pandemic. This would contrast with the malaise following the 2008 financial crisis, when recovery was weak and protracted.

In a note issued after the release of the Chinese PMI data, economists at Nomura said the average of the PMIs for February and March was only 43.9 – still well below the average of approximately 50 prior to the Covid-19 outbreak.