Industrial activity across China posted a surprising growth during the month of March, beating expectations after factories resumed operations following the Lunar New Year holiday. China’s official manufacturing PMI surged to 51.9 in March from 50.6 during February, against economists’ forecast for a rise to 51.

Meanwhile, the services sector expanded at an even faster pace in the month of March, with the NBS’ official non-manufacturing PMI increasing to 56.3 in March from 51.4 in the previous month. The official composite PMI for the month of March came in at 55.3, significantly higher than February’s reading of 51.6, giving markets hope of rapid economic recovery in China.

While smaller and private companies in the services industry were holding back growth in this sector over the past few months, widening the gap between its performance and that of the manufacturing sector, pent-up demand among Chinese consumers helped the services sector surge ahead this month. However, despite these encouraging signs of economic recovery, the government has taken a more cautious outlook about growth for the current year.

The Chinese government estimates a GDP of above 6% for 2021, while economists have forecast a higher rate of growth, exceeding 8%. China’s Premier Li Keqiang has previously stated that the focus will be on consolidating economic recovery through 2021 instead of driving economic growth higher.