The Purchasing Managers’ Index (PMI), the benchmark indicator for the industry, recorded 50.5 points in March, 0.3 points higher than the previous month’s 50.2, thus meeting analysts’ predictions.
In this indicator, a value above the 50-point threshold indicates growth in the sector’s activity compared to the previous month, while a value below indicates contraction.
Among the five sub-indices that compose the manufacturing PMI, production, new orders—which are crucial for measuring demand—and delivery times were above this mark, whereas inventories of raw materials and employment remained in the contraction zone.
Zhao Qinghe, a statistician at the NBS, attributed the sector’s recovery in March to the definitive dissipation of the Lunar New Year impact, the main holiday season in China, which had weighed on the manufacturing industry in January after three consecutive months of growth.
Julian Evans-Pritchard, an analyst at the British consultancy Capital Economics, noted in a report that the rise in new orders in March may be due to U.S. importers bringing forward their purchases of Chinese goods before new tariffs took effect.
“Export orders rose to their highest level since last April,” the analyst observed.
The NBS also reported today that the PMI for the services and construction sectors recovered from 50.4 points in February to 50.8 points in the month ending today.
This result exceeded analysts’ expectations, who anticipated this indicator would stand at 50.5 points, the same level as the manufacturing PMI.
In any case, it is the construction sector, which rose from 52.7 to 53.4 points, driving the pace: the services sector, which had been stable in February, rose 0.3 points to 50.3 points.
“The official PMIs suggest infrastructure spending is recovering (…) The construction PMI rose to a 10-month high, likely supported by fiscal backing,” explained Evans-Pritchard.
The composite PMI, which combines the performance of manufacturing and non-manufacturing industries, rose from 51.1 in February to 51.4 points in March.
Capital Economics highlighted that this leaves the average for the first quarter of 2025 below the last quarter of 2024, pointing to “a quarterly contraction in GDP growth that will be even more evident in annual data due to an unflattering base effect.”
“We doubt the rest of the year will be much better. Budgets allow for greater fiscal support in the coming months, but U.S. rates, which will rise this week, will start to weigh on exports sooner or later,” observed Evans-Pritchard.
For more information, visit the [Capital Economics website](https://www.capitaleconomics.com/).
