China’s manufacturing PMI reaches 51.9%

On March 31, the data released by the National Bureau of statistics showed that both the supply and demand sides of the national manufacturing industry accelerated to pick up in March, and the PMI index of the manufacturing industry in that month was 51.9%, 1.3 percentage points higher than that in February. Due to the reduction of the starting time for the local Chinese new year, the acceleration of production and the continuous improvement of market demand, the production and operation conditions of all kinds of enterprises have improved, especially small and medium-sized enterprises. However, due to the rising prices of raw materials, some small and medium-sized enterprises have increased cost pressure.

From the perspective of enterprise performance, the prosperity of large, medium and small enterprises improved to varying degrees in March. The PMI of large, medium and small enterprises was 52.7%, 51.6% and 50.4%, which were 0.5%, 2% and 2.1 percentage points higher than that of last month respectively. The production and operation conditions of enterprises of different scales were improved. Although the prosperity level of small enterprises is lower than that of large and medium-sized enterprises, the expected index of production and operation activities has risen to 58.4%.

“The pace of production and demand expansion in the manufacturing industry has accelerated.” Zhao Qinghe, Senior Statistician of the service industry survey center of the National Bureau of statistics, pointed out. In March, the production index and new order index were 53.9% and 53.6% respectively, which were 2 and 2.1 percentage points higher than last month. Among them, from the perspective of industry situation, the two indexes of non-metallic mineral products, special equipment, electrical machinery and equipment, computer communication electronic equipment and instruments and meters are higher than 55%, and the prosperity of both sides of production and demand of related industries rises rapidly.

It is worth mentioning that in March, the new momentum played a more significant leading role in the development of manufacturing industry. From the perspective of key industries, PMI of high-tech manufacturing industry and equipment manufacturing industry were 53.9% and 52.9% respectively, 2 and 1 percentage points higher than that of manufacturing industry as a whole; meanwhile, the employment index of the above two industries also rose to 51.2% and 50.5% respectively, indicating that the employment demand of related industries has increased.

After the Spring Festival, the domestic market production and demand to speed up the release at the same time, the world’s major economies are also continuing to recover. In March, the new export order index and import index were 51.2% and 51.1% respectively, which were 2.4 and 1.5 percentage points higher than that of last month. The import index has risen to the peak in recent years.

“Since March, with the increase in the number of vaccinations and the decrease in the number of confirmed cases, the recovery process of the world’s major economies has been accelerated, and the PMI index of manufacturing industry in Europe, the United States and Japan rose in the boom and bust line in that month.” Wang Jingwen, director of the macroeconomic research center of the Research Institute of Minsheng Bank, pointed out that with the re opening of the global economy, China’s import situation is also improving. The import index in March was the highest level since April 2018, which also confirmed the strong domestic demand.

However, it should also be noted that affected by the continued high operation of international commodity prices, the purchase price index and ex factory price index of main raw materials in March were 69.4% and 59.8% respectively, which were 2.7 and 1.3 percentage points higher than those of last month.

From the industry situation, the purchase price index of raw materials in petroleum processing, coal and other fuel processing, chemical fiber and rubber plastic products, general equipment, special equipment and other industries is higher than 75%, and the ex factory price index of chemical raw materials and chemical products, ferrous metal smelting and calendering, non-ferrous metal smelting and calendering and other industries is higher than 70%. The price pressure of related industries has increased .

Zhao Qinghe disclosed that some enterprises under investigation reported that due to the repeated overseas epidemic situation and the sluggish international trade and other factors, the supply of some imported raw materials was insufficient recently, the price rose significantly, and the delivery cycle was extended.

At present, the factory price of the national means of production is still higher than expected. According to the data disclosed by the National Bureau of statistics in February this year, among the 1.7% year-on-year increase in February, the tail effect of last year’s price change was about – 0.1 percentage point, and the impact of new price increase was about 1.8 percentage point.

However, the new price factors have also raised the cost of some downstream enterprises, and the profit space has been squeezed. This trend may continue. Li Mo, Macro Analyst of Caixin, pointed out that the purchase price index and ex factory price index of PMI raw materials in March were 69.4% and 59.8%, respectively, higher than 2.7 and 1.3 percentage points of last month, reaching a new high since 2017. However, as the price of raw materials continues to rise faster than the ex factory price, the profits of middle and downstream enterprises are squeezed. The purchase price of raw materials continues to rise, indicating that the PPI of industrial producer price index will continue to rise in March.

“With the recovery of domestic and foreign demand and the acceleration of finished product sales, enterprises have entered the active replenishment cycle.” As for the next step, Li Mo predicted that with the controlled impact of the epidemic and the expansion of vaccination coverage, domestic demand will accelerate the shift to the consumer side in the second quarter, and overseas demand will also usher in a period of rapid recovery, which will form a strong support for the domestic manufacturing industry. It is expected that the manufacturing industry will continue the upward repair trend in the second quarter, and the PMI rate of manufacturing industry will fluctuate around 52%.

Beijing Business News (reporter Tao Feng, Liu Hanlin)

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