BEIJING - CHINESE manufacturing expanded slightly in March following a steep months-long decline that wiped out millions of jobs as the global financial crisis battered exports, a business group said on Friday.

The state-sanctioned China Federation of Logistics and Purchasing said its monthly purchasing managers index rose to 52.4 in March, up from February's 49, on a 100-point scale where numbers above 50 show an expansion.

'This month's manufacturing PMI index continued to maintain recovery momentum,' the federation said in a statement.

The collapse in Chinese trade has forced thousands of factories to close and the government says at least 20 million people have been thrown out of work. Communist leaders worry about unrest if more jobs are lost.

Beijing has launched a 4 trillion yuan (US$586 billion) stimulus aimed at reducing reliance on exports by pumping money into the economy through higher public works spending in hopes of boosting domestic consumption.

The latest data suggest 'manufacturing may soon rebound in China', said Moody's Economy.com analyst Sherman Chan in a report.

However, 'China's growth will not return to the pre-crisis pace without a global economic recovery', she said. 'It remains a challenge for the government to reach its ambitious growth target of 8 per cent for 2009.' The survey's manufacturing component rose to 56.9 in March from February's 51.2, with new domestic orders at 54.6, up from 50.4.

Trade was still shrinking, with imports and exports at 47.5, though that was a slower decline than February's 43.4 figure.

The federation did not say how many companies were included in the survey.

A similar survey released this week by Hong Kong brokerage CLSA Asia-Pacific Markets showed Chinese manufacturing still contracting in March. -- AP