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China PMI March 2022

China: Manufacturing and Services PMIs deteriorate in March amid fresh Covid-19 outbreaks at home

The National Bureau of Statistics’ Manufacturing Purchasing Managers’ Index (PMI) came in at 49.5 in March, down from February’s 50.2. As such, the index dropped below the 50.0 no-change mark, signaling a deterioration in business conditions from the previous month.

The headline print reflected deteriorations in output, employment, exports, purchasing activity and new orders. Meanwhile, both input and output price inflation rose sharply, likely influenced by Covid-19-induced logistical disruptions and higher international commodity prices following the outbreak of the war in Ukraine. The National Bureau of Statistics’ non-Manufacturing PMI came in at 48.4 in March, down from February’s 51.6, amid deteriorations in business activity, employment, exports and new orders. The NBS PMI readings for both manufacturing and services were in line with the Caixin PMI data—which covers smaller firms—and suggest an extremely weak end to Q1.

Analysts at Nomura were downbeat regarding the near-term outlook:

“Looking to April, we expect official manufacturing and non-manufacturing PMIs to drop further on escalated lockdowns and social distancing measures across China. Beijing’s determination in maintaining its zero-Covid strategy (ZCS) for fighting the infectious Omicron variant will very likely deal a severe blow to China’s economy and will also have a global impact.”

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