Manufacturing activity in the world’s two largest economies perked up in March, an antidote to financial-market fears of a coming global recession, though pockets of weakness remain and the outlook is uncertain.
Gauges of the U.S. and Chinese factory sectors stabilized last month from earlier slowdowns, sparking a rally in U.S. stocks after investors had braced for weaker readings. Investors, in turn, sold off supersafe government bonds, sending yields on long-term Treasury bonds above short-term interest rates Monday. That reversed a so-called inverted yield curve that had developed in late March in which short-term rates are higher than long rates, a precursor to economic downturns in the past.
The U.S. Institute for Supply Management said its monthly index of manufacturing activity rose to 55.3 in March from 54.2 the previous month, with new orders particularly buoyant, boding well for U.S. factory output in the coming months. The index is based on whether manufacturing supply managers see activity at their companies expanding or contracting, with numbers above 50 indicating expansion.