PMI Related Data Of China'S Manufacturing Industry Shows The Momentum Of Rapid Economic Recovery

After a brief expansion in February, the outlook of the manufacturing industry fell back to the critical point in March, indicating that the situation of the manufacturing industry was stable and the repair momentum slowed down. The Caixin China Manufacturing Purchasing Manager Index (PMI) released on April 3 recorded 50.0 in March, 1.6 percentage points lower than that in February, and fell on the boom and bust line, indicating that the overall economic activity of the manufacturing industry was flat with that of last month, and the recovery momentum slowed down.

This trend is consistent with the manufacturing PMI of the National Bureau of Statistics. The manufacturing PMI in March recently released by the Bureau of Statistics fell 0.7 percentage points to 51.9, which was in the expansion range for three consecutive months.

Itemized data showed that the repair speed of supply and demand in manufacturing slowed down. In March, the manufacturing production index and new order index fell back in the expansion range, only slightly higher than the boom and bust line. Some of the interviewed enterprises reported that thanks to the deregulation of epidemic prevention and control, customer demand and quantity have improved, but some enterprises said that sales were relatively weak, especially overseas orders. By category, sales of consumer goods increased, while sales of intermediate goods and investment goods declined. In addition, the index of new export orders returned to the contraction range, mainly due to sluggish external demand.

The employment situation has not been fundamentally improved, and the manufacturing employment index fell below the critical point again in March. According to the survey, the decline in employment is mainly due to the unfilled job vacancies after the voluntary resignation of employees and the cost reduction of enterprises. At the same time, the backlog index declined slightly in the expansion range, and the capacity pressure was relatively mild.

The raw material purchase price index fell at the critical point in March, which means that the manufacturing cost remained unchanged month on month after five consecutive months of increase. The weak demand limits the pricing ability of enterprises. The ex factory price index of the month fell slightly to the contraction range, where the price of consumer goods fell more than the price of intermediate goods and investment goods.

The manufacturing supply chain continued the repair trend in February, and the supplier delivery time index in March continued to be in the expansion range, but slightly dropped compared with last month.

Manufacturing business owners are still confident in the future production and operation. The confidence index in March fell from the high point in recent two years in February, but it is still higher than the long-term average. Enterprises generally expect that they will return to a more normal operating state in the next year. Factors such as improved market demand, increased customer numbers, and new product development support the industry's growth forecast.

Wang Zhe, a senior economist at Caixin Think Tank, said that in March, Caixin China's manufacturing PMI data showed signs of weakening the momentum of rapid economic recovery, reflecting that the foundation for economic recovery was not solid after the short-term release of the backlog of demand during the epidemic. Looking into the future, economic growth still depends on domestic demand, especially the improvement of residents' consumption level. Only by consolidating the employment base, increasing residents' income and improving market expectations can we implement the set goal of restoring and expanding consumption put forward by the central government.