Source: Sharecast
The official manufacturing purchasing managers’ index (PMI) rose to 50.4 from 49.0 in February, surpassing the 50 threshold that separates expansion from contraction and beating expectations for a 50.1 reading, according to data from the National Bureau of Statistics.
It marked the highest level in 12 months and a recovery after two consecutive months of contraction, aided by factories resuming operations after an extended Lunar New Year holiday.
Sub-indices showed production and new orders returning to expansion, while new export orders improved but remained in contraction territory.
Stronger external demand, including robust export growth in the first two months of the year, helped underpin the rebound, with shipments rising sharply amid firm demand from regions such as southeast Asia and Europe.
The improvement also extended beyond manufacturing, with the non-manufacturing PMI, which includes services and construction, rising to 50.1 from 49.5, indicating a modest expansion in broader economic activity.
However, the recovery comes against a backdrop of intensifying cost pressures driven by higher energy and commodity prices.
The sub-index for raw material purchase prices surged to 63.9, while factory-gate prices also rose, reflecting the impact of elevated oil, chemical and logistics costs linked to the Middle East war.
Input costs were rising faster than output prices, suggesting manufacturers were absorbing part of the shock, raising concerns over margin compression.
There were also signs that domestic demand remained fragile, with rising input costs potentially feeding through to wages and employment, further dampening consumption.
Reporting by Josh White for Sharecast.com.
