China’s official PMIs showed a return to expansion in March, with Manufacturing PMI rising from 49.0 to 50.4, beating expectations of 50.3 and marking the strongest reading in a year. The rebound snapped two months of contraction, driven by a pickup in production and a sharp improvement in new orders, with export demand showing notable momentum.
Underlying details point to a partial recovery. The production index rose by 1.8 51.4. New orders climbed by 3.0 to 51.6. However, the recovery remains uneven, with sub-indices for employment, raw material inventories, and delivery times still in contraction.
At the same time, inflation pressures are building. The purchase price index surged from 54.8 to 63.9. Output prices also increased but at a more modest pace, indicating limited pricing power for firms.
Meanwhile, Non-Manufacturing PMI rose from 49.5 to 50.1, returning to expansion. The data point to a tentative recovery in activity, but one increasingly challenged by rising input costs and margin pressure.
