China's Purchasing Managers' Index (PMI) for March showed a return to expansion territory, indicating a rebound in the country's economic activity. The manufacturing PMI, non-manufacturing Business Activity Index, and the composite PMI output index all climbed above the 50-point mark that separates expansion from contraction. They registered at 50.4%, 50.1%, and 50.5% respectively, increasing by 1.4, 0.6, and 1.0 percentage points from the previous month.
In the manufacturing sector, the PMI reached 50.4% as companies accelerated the resumption of work and production following the Spring Festival holiday, leading to enhanced market activity. Both supply and demand expanded simultaneously. The production index and the new orders index stood at 51.4% and 51.6%, up by 1.8 and 3.0 percentage points respectively, both entering expansion territory. This indicates accelerated production activities and a notable improvement in market demand. Industries such as agricultural and food processing, and non-ferrous metal smelting and pressing recorded production and new orders indices above 55.0%, indicating rapid release of output and demand. However, sectors like textiles, apparel, and chemical fibers continued to show indices below the threshold, reflecting weaker market activity. Driven by the recovery in production and demand, corporate procurement willingness strengthened, with the purchasing volume index rising to 50.9%.
PMI readings for large, medium, and small enterprises all improved. The PMI for large enterprises was 51.6%, while for medium and small enterprises it was 49.0% and 49.3% respectively, showing significant improvement in sentiment, particularly for smaller firms. Key sectors demonstrated robust expansion. The PMI for high-tech manufacturing was 52.1%, remaining above the threshold for the 14th consecutive month. The equipment manufacturing and consumer goods industries also saw their PMIs rise into expansion territory. Price indices experienced a substantial rebound, influenced by rising prices for some bulk commodities and increased procurement activities. The indices for raw material purchase prices and ex-factory prices jumped to 63.9% and 55.4% respectively. Market expectations remained stable with a slight upward trend, as the production and business activity expectation index edged up to 53.4%. However, survey results also indicated that due to factors like geopolitical conflicts, prices for related raw materials have surged, and increased logistics costs were reported by a higher proportion of enterprises compared to last month.
The non-manufacturing Business Activity Index rose to 50.1%. The service sector index climbed to 50.2%, moving into expansion territory. Industries like rail transport, telecommunications, and financial services exhibited high activity levels above 55.0%. Conversely, sectors related to post-holiday consumer travel, such as retail and catering, saw activity indices fall below the threshold. The business activity expectation index for services remained high at 54.8%, indicating sustained optimism. The construction sector activity index improved to 49.3% as projects gradually resumed, and business expectations for the sector stayed above 50.0%, reflecting confidence.
The composite PMI output index, which combines manufacturing production and non-manufacturing activity, rose to 50.5%, signaling an overall improvement in the business climate for Chinese enterprises.