Chinese industrial activity rose sharply in March, signaling that the world’s second-largest economy has made a recovery attempt just before facing the growing threat of falling external demand.

The Purchasing Managers’ Index (PMI) for the industrial sector rose to 52.0 points this month, according to figures released by the National Bureau of Statistics on Tuesday. Compared to February, the indicator reported a sharp rise after recording a low of 35.7 points. For its part, the index of Purchasing Managers’ Index for the services and construction sectors is at 52.3 points. Thus, the meters are above the 50-point key line that separates expansion from contraction.

Although growth shows better sentiment in Chinese factories, production remains far from usual. The survey requires companies to indicate how they compare their business performance with last month. Ie the data simply shows that Chinese companies are seeing some improvement since February when the corresponding indicator has shrunk at its fastest pace since 2005.

April-June forecasts depend both on how fast domestic demand can recover and the strength of demand in overseas markets.

“A number above 50 does not mean that economic activity is fully resumed. We need to understand the unprecedented complexity of the situation and pay close attention to the virus’s impact on production and demand”, said researchers at China Logistics Information Center.

“Although industrial PMI recovered quickly in March, the survey showed that companies are still facing relatively high operational pressure”, a statement from the National Statistical Office said. Most companies report a lack of financing and declining demand. “The global spread of the virus will severely hit the global economy and trade and will bring new, severe challenges to the Chinese economy”, it said.

The index of new export industrial orders rose to 46.4 points in March from 28.7 points a month earlier. The industrial employment indicator was 50.9 points, up from 31.8 points in February.

In the services and construction sectors, although the core index rose to over 50 points, many sub-indicators remain low – the employment gauge reports 47.7 points and that of new export orders 38.6 points.

“This shows that companies do not want to hire new employees before they can confirm that their business activities provide a stable return”, said Iris Pang, chief economist at ING NV.