In March, China's comprehensive PMI output index was 48.8%, down 2.4 percentage points month on month; The manufacturing PMI index was 49.5%, down 0.7 percentage points; The non business activity index fell by 48.4%, to 48.4%.
Manufacturing PMI fell more than expected against the season. In March, the manufacturing PMI was 49.5%, lower than the market expectation (49.8%), breaking the rule that the data in March was no less than 50% since the data were available in 2005. Among the main sub indicators, only the purchase price and finished product inventory increased, while the other indicators fell to varying degrees, especially the new orders and purchase volume index.
Affected by the impact of the epidemic and weak domestic demand, the supply side continued to decline, and the production index (- 0.9%) was significantly weaker than the historical average (1.5%), with obvious anti seasonal characteristics. The epidemic has a great impact on production and logistics distribution, and the stability of manufacturing supply chain has been affected to a certain extent. Demand fell back against the season. In March, the new order index was 48.8%, significantly weaker than the historical average (1.5%) month on month (- 1.9%), the lowest since March 2020 as in October 2021. Prices accelerated upward, further increasing the pressure on middle and lower reaches enterprises. Among them, the purchase price index and ex factory price index of main raw materials rose to a high of nearly five months after exceeding the seasonal rise for three consecutive months.
The prosperity of large and medium-sized enterprises declined and small enterprises rebounded. However, the employment index of small enterprises has fallen sharply, and the impact on its operation needs to be further observed. The epidemic has a great impact on non manufacturing business activities, especially the service industry, and the impact of the epidemic in March may not be fully reflected in the data.
Considering that the overseas central banks have entered the tightening cycle, the peak of global economic recovery has passed, the export growth rate will probably fall in the future, the superimposed epidemic impact is still difficult to eradicate, and the recovery of domestic demand is not ideal, the policy will continue to increase its strength.
Risk tips: the central bank regulates and controls beyond expectations, inflation exceeds expectations, trade friction heats up, financial market fluctuations increase, economic downward pressure increases, the risk of epidemic changes beyond expectations outside China, the risk of overall deterioration of China US relations, the sharp deterioration of the international economic situation, the overseas black swan incident, etc.
