In March, the manufacturing PMI was 49.5%, down 0.7 percentage points from the previous month, from expansion to contraction. Overall, the simultaneous weakening of production and demand at both ends has driven the overall PMI value back below the boom and bust line.
In terms of manufacturing demand, in March, the new order index was 48.8%, down 1.9 percentage points from the previous month, returning below the boom and bust line. The multi-point spread of the epidemic, weak credit demand and weak property market led to sluggish demand. In terms of external demand, the new export order index in March was 47.2%, down 1.8 percentage points from the previous month, further shrinking from the previous month. There is great uncertainty in the external demand market, and China's epidemic has disturbed the industrial chain and supply chain. In terms of manufacturing supply, the production index in March was 49.5%, down 0.9 percentage points from the previous month, from expansion to contraction, which was mainly affected by the multi-point spread of the epidemic, the upgrading of prevention and control policies, and the temporary shutdown of some enterprises.
From the difference index between the new order index and the finished product inventory index in March, the difference decreased significantly compared with the previous month and became negative, or it indicates that the demand is sluggish, the finished products are overstocked, and the economic momentum of the manufacturing industry is insufficient. In March, PMI raw material purchase price and ex factory price index rose sharply, and PPI is expected to increase by about 1.0% month on month in March; In March, the purchase price of industrial producers may increase by about 1.0% month on month. In terms of enterprise scale, in March, large enterprises continued to expand, while small and medium-sized enterprises contracted.
Looking ahead, under the epidemic, the triple pressure of shrinking demand, supply shock and weakening expectation will continue to strengthen, and the steady growth policy will continue to increase. In terms of fiscal policy, the intensity of financial support will be further increased this year, and the balance profits handed over by the central bank will significantly increase the available financial resources. In terms of monetary policy, although the policy of reducing reserve requirements and interest rates generally expected by the market in March failed to be implemented, the central bank continued to release positive policy signals, raising the possibility of reducing reserve requirements and interest rates in the second quarter. In terms of manufacturing, industries facing great difficulties due to the continuous impact of the epidemic especially need the support of the government and financial institutions.
In addition, the conflict between Russia and Ukraine has had a serious impact on the international supply chain. The rapid rise in international commodity prices has increased China's imported inflationary pressure, and the rising cost and poor transmission of raw materials have squeezed the profit space of enterprises. At the same time, the geopolitical conflict disturbs the external demand market, resulting in the weakening of the external demand of the manufacturing industry. In this regard, we need to do a good job in ensuring supply and price stability, and launch multiple measures to stabilize foreign trade to provide support for export enterprises.
It is expected that the epidemic situation will gradually improve in the second quarter, and the stability and consistency of policy expectations of various departments will be strengthened. With the coordination and cooperation of fiscal policy and monetary policy, the economy may accelerate the repair and the manufacturing industry will gradually recover.
