The China Federation of Logistics and Purchasing, or CFLP, said in a statement on its website that the rise was the result of increasing trade activity, increasing orders and slowing price increases for upstream products.

Enterprises are demonstrating positive signs in their performance and the economy is stabilizing with upward momentum, the statement said.

The rise indicates that the economy may further stabilize in the future, said Zhang Liqun, an analyst from the Development Research Center of the State Council.

The PMI stayed above 50 for the sixth consecutive month in March, the CFLP said.

A PMI reading of 50 or greater indicates expansion, while a reading below 50 indicates contraction.

Of all five major sub-indices, four rose and one dropped last month, the CFLP data showed.

The sub-index for production rose 1.5 percentage points to 52.7 percent. It reached its highest level in ten months, indicating active production among manufacturing enterprises, the statement said.

Orders received by manufacturers climbed, as the sub-index for new orders rose 2.2 percentage points from the previous month to 52.3 percent.

The sub-index for raw material inventories dropped 2 percentage points from the previous month to 47.5 percent. March marked the second month for the sub-index to stay below 50 percent.

The sub-index for employment rose 2.2 percentage points to 49.8 percent and the sub-index for supplier delivery times climbed 2.8 percentage points to 51.1 percent.

The sub-index for purchasing prices of raw materials shrank 4.9 percentage points to 50.6 percent. March was the seven month for the index to stay above the demarcation level, indicating that prices for raw materials in the manufacturing sector have continued to rise.

The business outlook sub-index rose 0.9 percentage points from a month earlier to 65.5 percent, indicating that manufacturing companies are optimistic about their future prospects, the statement said.

The HSBC's final PMI for China's manufacturing sector, which was also released on Monday, rose to 51.6 in March from 50.4 in February, signaling a modest improvement in the manufacturing economy for the fifth consecutive month.