Manufacturing PMI and other indices return to expansion territory in March

This text is reproduced from: Tianjin Daily

Demand and supply both expand in sync; market demand clearly improves

In March, manufacturing PMI and other indicators returned to the expansion zone

Xinhua News Agency reporters He Xiao and Wang Yuxiao

Data released on March 31 by the National Bureau of Statistics Service Industry Survey Center and the China Federation of Logistics and Procurement show that in March, the manufacturing Purchasing Managers’ Index (PMI), the non-manufacturing Business Activity Index, and the composite PMI output index all returned to the expansion zone, at 50.4%, 50.1%, and 50.5% respectively. Compared with the previous month, they rose by 1.4 percentage points, 0.6 percentage points, and 1.0 percentage point, respectively, indicating that China’s economic sentiment has rebounded.

As manufacturing PMI rises into the expansion zone, demand and supply both expand in sync—

According to the data, in March, as enterprises accelerated their work resumption and production after the Spring Festival, market activity increased, and manufacturing PMI was 50.4%, returning to the expansion zone.

“Demand and supply both expand in sync. The production index and the new orders index were 51.4% and 51.6%, respectively, up 1.8 percentage points and 3.0 percentage points from the previous month. Both rose to the expansion zone. Manufacturing firms’ production activities picked up, and market demand improved noticeably.” said Huo Huili, chief statistician at the National Bureau of Statistics Service Industry Survey Center.

By industry, the production and new orders indices for sectors such as processing of agricultural and sideline foods and non-ferrous metal smelting and pressing and rolling were both above 55.0%, with related industries’ firms releasing production and demand more quickly. Meanwhile, for industries such as textile, apparel and accessories, chemical fiber, and rubber and plastic products, the two indices continued to remain below the critical point, and market activity was relatively weak. Driven by the recovery of production and demand, firms’ procurement intention strengthened, and the procurement quantity index was 50.9%, up 2.7 percentage points from the previous month.

Wen Tao, an analyst at the China Federation of Logistics Information Center, said that in March, the impact of the Spring Festival had basically faded, construction sites across the country resumed full operations, economic vitality picked up, and manufacturing market demand was released fairly well.

Prices indices rebounded sharply. Data show that, influenced by factors such as the sustained rise in the prices of some bulk commodities in recent times and the acceleration of enterprises’ purchasing activities, the main raw material purchase price index and the ex-factory price index were 63.9% and 55.4% respectively, up 9.1 percentage points and 4.8 percentage points from the previous month. Overall, the manufacturing market price level rebounded noticeably.

“Taken together, in March the rebound in manufacturing market supply and demand, along with the linked rise in market prices, shows that the economic rebound has good synergy, and the positive foundations have been further consolidated.” Wen Tao said.

Huo Huili noted that in March, the business expectations index for production and operating activities was 53.4%, up 0.2 percentage points from the previous month, indicating that manufacturing enterprises’ confidence in near-term market development had strengthened.

“By industry, the business expectations indices for production and operating activities in sectors such as special-purpose equipment, automobiles, and railway, ship, and aerospace equipment were in the higher-optimism range, at 56.0% or above. Related enterprises are more optimistic about future industry development.” Huo Huili said.

The business activity index rises into the expansion zone; non-manufacturing business conditions improve—

In March, the non-manufacturing business activity index was 50.1%, up 0.6 percentage points from the previous month, reflecting an improvement in non-manufacturing business conditions. The services business activity index was 50.2%, up 0.5 percentage points from the previous month.

Huo Huili said that by industry, the business activity indices in sectors such as railway transportation, telecom broadcasting television and satellite transmission services, monetary and financial services, insurance, and others were all in higher-activity ranges of 55.0% or above, with the total volume of business growing quickly. “In terms of market expectations, the business activity expectations index for the services sector was 54.8%, continuing to remain at a relatively high operating level, indicating that services firms remain optimistic about market development in the near term.” Huo Huili said.

At the same time, investment-related activities for infrastructure construction clearly kicked off. As construction projects in various regions gradually resumed work after the holidays, the construction industry business activity index was 49.3%, up 1.1 percentage points from the previous month. From the perspective of market expectations, the construction industry business activity expectations index was 50.5%, above the critical point, indicating that construction firms remain confident about future industry development.

Wu Wei, an analyst at the China Federation of Logistics Information Center, said that the level of business conditions for traditional building construction-related activities remains relatively low. However, the business conditions for building activities related to infrastructure investment have risen significantly. “The infrastructure demand in key areas such as the ‘six networks’ and comprehensive 3D transportation facilities, consumption, low-altitude areas, ‘artificial intelligence +’, and education and healthcare will continue to be released, laying the groundwork for leveraging infrastructure investment to support steady economic growth.”

“In March, the composite PMI output index was 50.5%, up 1.0 percentage point from the previous month, and above the critical point. This indicates that the overall business and operating conditions of enterprises in China are improving.” Huo Huili said.

Xinhua News Agency, March 31, Beijing