China PMI slows to 50.8 as cost pressures hit two-year high

RatingDog / S&P Global China manufacturing PMI for March 2026. Yesterday we had the official PMIs. Summary:China manufacturing PMI at 50.8 (prev. 52.1), still in expansion for 4th straight month

Growth slows but remains second-strongest in six months

Output, new orders and employment all continue to rise

Input price inflation jumps to highest since March 2022

Output prices hit four-year high, signalling pass-through

Supply chains deteriorate: delivery times longest since Dec 2022

Middle East conflict cited as key driver of cost pressuresChina’s manufacturing sector continued to expand in March, though momentum cooled as rising cost pressures and supply chain disruptions began to weigh on activity.The headline PMI came in at 50.8, down from February’s recent peak of 52.1 but still above the 50 threshold that separates expansion from contraction. This marks a fourth consecutive month of growth, with operating conditions continuing to improve overall, albeit at a more moderate pace. Underlying demand remained supportive. Both output and new orders increased again, with firms citing stronger market demand, customer acquisition and competitive pricing. Export orders also rose, though at a slower pace than the prior month, suggesting some softening in external demand.Production expanded for a fourth straight month, while employment rose for a third consecutive month, marking the longest stretch of job creation since mid-2021. Firms also increased purchasing activity, reflecting ongoing efforts to meet demand.However, the survey highlighted a sharp deterioration in cost conditions. Input prices rose at the fastest pace in two years, driven by higher raw material costs and energy prices. Output prices also increased at the strongest rate in four years, indicating that firms are increasingly passing on these higher costs to customers.At the same time, supply chain pressures intensified. Supplier delivery times lengthened to the greatest extent since December 2022, reflecting disruptions linked to volatile input prices, capacity constraints and logistical challenges. Rising backlogs of work point to growing strain on production capacity.Despite these headwinds, manufacturers remain broadly optimistic about the year ahead, supported by expectations of improved demand, capacity investment and supportive government policy. However, sentiment has softened from recent highs.The data highlight a more complex macro environment. While domestic policy remains geared toward stability with moderate growth targets, external risks—particularly geopolitical tensions driving higher energy prices—are emerging as a key challenge. This combination of steady growth and rising inflationary pressure underscores the delicate balance facing China’s industrial sector in the months ahead.
This article was written by Eamonn Sheridan at investinglive.com.

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