In March, China’s official Manufacturing PMI recorded 50.5, the fastest growth in a year, matching expectations. The production index increased to 50.5 from 50 in February, while the new order index rose to 51.8.
The new export order index remained at 49.0, indicating continued contraction for the 11th consecutive month due to weak external demand. The Non-Manufacturing PMI was reported at 50.8, higher than the expected 50.5 and the previous 50.4.
Composite Pmi Signals Gradual Recovery
The Composite PMI improved to 51.4 from 51.1. A diffusion index measures changes in economic indicators, with readings above 50 indicating expansion. Even small increases in such indices reflect ongoing economic resilience and confidence among businesses, suggesting greater overall improvement.
This latest batch of PMI data from China reveals a mixed picture, with clear signs of domestic robustness yet persistent headwinds from abroad. Manufacturing activity has edged firmly back into expansion territory, and that matters—not merely because it’s the highest in a year, but due to what it suggests underneath. The rise in the new orders index shows that internal demand is starting to gather some quiet momentum, and that has ripple effects for raw materials, logistics, and energy usage. When we see these figures climbing—a 50.5 for production and 51.8 for new orders—we know companies are receiving more work and likely committing to higher output in the near term.
Despite this, one number remains static—a stubborn 49.0 for new export orders—and that tells its own story. After eleven months below the 50 threshold, it’s clear that overseas appetite remains soft. From a trader’s perspective, this means cross-border flows tied to Chinese manufacturing remain under pressure. We’re likely to see this continue, especially in regions facing slower growth or grappling with tighter monetary conditions.
The Non-Manufacturing PMI came in slightly stronger than last time and above forecasts. That uptick may not look especially dramatic, but it reflects continued resilience in services, construction, and broader business activity. When those segments show even marginal gains, it tightens the feedback loop in the wider economy. Together with the rise in the Composite PMI to 51.4, we’re seeing signs of balance being restored.
Domestic Strength Offsets Export Weakness
From our desk, what stands out is the way domestic recovery is taking shape despite the drag from external exports. Liu’s figures highlight this subtle two-speed shift. Yuan’s interpretation over month-on-month movement reminds us that small numerical advances—anything above 50—carry weight here. The data tells us the economy isn’t surging ahead, but it is grinding forward.
So, taking this into consideration, near-term volatility across industrial commodity contracts might slow, at least temporarily, as participants price in steady internal demand. That sort of stable footing broadens scenarios where policy tweaks are measured rather than reactive. Meanwhile, spreads that hinge on foreign orders—particularly those in shipping or electronics—still warrant caution. We’re watching for potential short-term setups in areas linked to domestic infrastructure or logistics, while maintaining a more guarded stance on those that rely on outbound activity.
As always, the value lies in teasing out the detail behind the aggregate. Even when the headline looks plain, it’s often the components underneath driving the real motion. Understanding those shifts—nailed down by the right figures—allows for sharper positioning. Irrespective of headlines, that remains the task ahead.
