Both ends of production and demand weakened synchronously, and the manufacturing PMI fell below the critical point. In March, the manufacturing PMI was 49.5%, down 0.7 percentage points from the previous value and below the critical point. Among them, the production index fell to 49.5%, down 0.9 percentage points from the previous month, also below the critical point; The new order index fell 1.9 percentage points from the previous value to 48.8%. In March, the comprehensive PMI output index was 48.8%, down 2.4 percentage points from the previous month.
Market demand weakened, and the new export order index stopped rising and turned down. In March, the PMI new order index fell 1.9 percentage points from the previous value to 48.8%, returning below the critical point, ending the recovery trend since January. From the perspective of new orders in China, the index of new orders in industries closely related to exports, such as textiles, textiles, clothing and general equipment, fell below 45%. From the perspective of new export orders, new export orders this month fell by 1.8 percentage points to 47.2% compared with the previous month. On the one hand, the wide spread of covid-19 variant Omicron partially offset the downward trend of China's export substitution effect. On the other hand, the international geopolitical conflict has intensified since March, and the export orders of some enterprises have been reduced or cancelled. Under the intertwined influence of the two factors, the margin of export boom weakens. In the short term, the impact of the epidemic and geopolitical conflict will still exist, and the demand will still be under pressure.
The production index fell below the boom and bust line, the inventory of raw materials decreased, and the inventory of finished products accumulated passively. Affected by the current round of epidemic, some enterprises temporarily reduced production and stopped production, and affected the production of enterprises in relevant upstream and downstream industrial chains. The production and operation activities of manufacturing enterprises continued to slow down. This month's production index fell 0.9 percentage points to 49.5% compared with the previous month, lower than the critical point, and the prosperity of enterprise production fell. In terms of inventory, the inventory of raw materials fell by 0.8 percentage points to 47.3% compared with the previous month, while the inventory of finished products rose by 1.6 percentage points to 48.9% compared with the previous month. Under the continuous slowdown of production, the willingness of enterprises to prepare for inventory weakened. At the same time, the demand of the manufacturing industry fell, and the rate of inventory removal of finished products slowed down.
The purchase and sale price spread continued to expand, and the purchase and sale price index rose significantly. From the perspective of price index, the purchase price index and ex factory price index of raw materials this month continued the rebound trend in January, rising by 6.1 and 2.6 percentage points to 66.1% and 56.7% respectively compared with the previous month, and continued to be in the expansion range. The difference of purchase and sales index this month continued to expand, expanding from 5.9 percentage points in February to 9.4 percentage points in March. From the perspective of industry, affected by international geopolitical conflicts, the prices of some bulk commodities such as international crude oil and natural gas continued to rise sharply, and the price of Brent crude oil futures once exceeded US $120 / barrel. Affected by this, the two price indexes of upstream industries such as petroleum, coal and other fuel processing, ferrous metal smelting and calendering, nonferrous metal smelting and calendering exceeded 70% this month. Considering that the current conflict situation between Russia and Ukraine is not yet clear, the international crude oil price will still be high and there is room for upward growth, and China will still face imported inflation pressure in the short term. However, with the steady growth policy continuing to play a role, it is expected that China's inflation level will still be within the controllable range. We maintain our previous judgment. It is expected that the year-on-year growth rate of PPI may continue to decline quarter by quarter, but the decline range or margin will slow down, and the cost pressure of midstream and downstream enterprises is large.
