In March, the manufacturing PMI was 49.5%, lower than the market expectation of 49.8%, which also fell below the 50% boom and bust line again since October last year.
In March, PMI fell below the boom and bust line for the first time in the year. In March, the manufacturing PMI was 49.5%, lower than the market expectation of 49.8%, which also fell below the 50% boom and bust line again since October last year. In March, the PMI showed two characteristics. The first was that the PMI fell below 50% for the first time in the year, with a significant correction month on month, down 0.7 percentage points from the previous month; The second feature is the non seasonal decline. Generally speaking, PMI rebounded month on month in March, mainly due to the long Spring Festival holiday in February. The sharp drop in PMI reflects that there is still downward pressure on the economy in the short term, mainly due to price factors: first, the effect of economic stabilization policy has not been shown, and the trend of economic decline is still in progress; Second, the two sessions and the Beijing Winter Olympics were held in March, and some production was subject to certain restrictions; Third, the epidemic is becoming more and more severe. The number of confirmed cases in first tier cities (such as Shenzhen and Shanghai) is rising rapidly. The short-term outbreak of the epidemic suppresses demand and has a negative impact on production and transportation.
Demand has fallen sharply, and foreign demand is facing a test. On the demand side, the new order index in March was 48.8%, down 1.9 percentage points month on month. Domestic demand showed a rapid decline, which may be greatly impacted by the epidemic. The new export order index was 47.2%, down 1.8 percentage points month on month, and the decline deepened. We believe that the high point of foreign demand growth has passed. Due to the gradual weakening of global epidemic prevention and control and the gradual recovery of national production, the demand for Chinese products is declining. At the same time, the global economy is weakened by the conflict between Russia and Ukraine, which also reduces the demand for trade.
The production side fell sharply, mainly affected by policies. In March, the PMI production index fell 1.9 percentage points to 48.8%, a new low in the year. Affected by the impact of the epidemic, the Winter Olympics and weak domestic demand, supply continued to fall. We believe that the decline in production may be short-term, mainly because the government has not restricted production behavior and enterprises that alleviate the epidemic have increased their efforts to return to work.
Insufficient demand leads to enterprises’ passive replenishment. In March, the inventory of finished products increased by 0.4 percentage points to 48.9% month on month, while the inventory of raw materials decreased by 0.8 percentage points to 47.3%. Insufficient demand leads to passive replenishment of enterprises, which will face a certain pressure of destocking in the future. At the same time, the decline of raw material inventory shows that enterprises are relatively pessimistic about the future and their enthusiasm for production is not high.
