Events
In March, the purchasing manager index (PMI) of China's manufacturing industry was 49.5%, down 0.7 percentage points from the previous month, lower than the critical point, and the overall prosperity level of the manufacturing industry fell somewhat.
Comments
Manufacturing production and operation activities have slowed down on the whole. In March, the manufacturing PMI was 49.5%, shrinking to within the critical point. Since March, there has been a cluster epidemic in many parts of the country, coupled with the increase of geopolitical uncertainty in the conflict between Russia and Ukraine, the production and operation activities of Chinese enterprises have been affected to a certain extent, and the overall economic prosperity level has fallen.
The prosperity of large enterprises is still higher than the critical point, and small and medium-sized enterprises are facing great pressure. From the performance of enterprises of different sizes, the PMI of large enterprises in the month was 51.3%, down 0.5 percentage points from the previous month and still maintained in the expansion range; In March, the PMI of medium-sized enterprises was 48.5%, down 2.9% from the previous month; The PMI of small and medium-sized enterprises was 46.6%, an increase of 1.5 percentage points over the previous month, and the prosperity of small and medium-sized enterprises was lower than the critical point. Small, medium-sized and micro enterprises are also facing greater production pressure. With the effective control of the epidemic situation in some areas and the strong support of a series of policies and measures to promote the steady growth of industrial economy, the restrained production and demand will gradually recover, and the boom level is expected to pick up.
In terms of price, small and medium-sized enterprises are mostly distributed in middle and downstream enterprises. The purchase price index and ex factory price index of main raw materials in March were 66.1% and 56.7% respectively, 6.1 and 2.6 percentage points higher than that in the previous month, both rising to the high point in recent five months. The market price level of manufacturing industry has expanded, and the production costs of small and medium-sized enterprises are under pressure.
The expansion of manufacturing activity slowed. In terms of production, the manufacturing production index in March was 49.5%, down 0.9 percentage points from the previous month to the contraction range, indicating that the expansion of manufacturing production activities slowed down. Affected by the epidemic, on the one hand, workers are facing isolation and lack of personnel on duty, on the other hand, logistics and transportation are not smooth, delivery cycle is prolonged and capacity utilization is reduced. In March, the supplier distribution time index was 46.5%, 1.7 percentage points lower than that of the previous month, the lowest since March 2020, and the stability of the manufacturing supply chain was affected to a certain extent. Although the overall prosperity level of China's economy has declined, the expected index of manufacturing production and operation activities is 55.7%, which continues to remain in the boom range.
Manufacturing demand also fell. In March, the new order index was 48.8%, down 1.9 percentage points from the previous month, falling to the contraction range again, and the manufacturing demand weakened. It is worth mentioning that the two indexes of agricultural and sideline food processing, food, wine and beverage refined tea, electrical and mechanical equipment and other industries are higher than the critical point, and the production and demand maintain the expansion trend. In terms of external demand, the new export order index in March was 47.2%, down 1.8 percentage points from the previous month, still lower than the boom and bust line. At present, the recovery of major overseas economies is slowing down, which is mainly affected by the deterioration of overseas epidemic and the obstruction of transportation, and foreign demand is still weak.
Risk tips: the overseas epidemic fluctuates more than expected, the downstream demand is less than expected, and the monetary policy changes.
