China Factory Activity Unexpectedly Shrinks

The RatingDog China General Manufacturing PMI fell to 50.8 in March 2026 from 52.1 in February, signaling a slowdown in factory expansion and below the expected 51.6. Output and new orders continued to rise, though at a slower pace, with production expanding for the fourth consecutive month. Backlogs increased as demand outpaced production, while employment rose for the third month, marking the longest stretch of job creation since mid-2021. Buying activity continued to expand, lifting input stocks slightly, though finished goods inventories contracted marginally. Supplier delivery times lengthened to the greatest extent since December 2022. Input price inflation surged to its highest since March 2022, while output price inflation hit a four-year peak, driven by rising energy costs amid Middle East tensions. Despite these pressures, manufacturers remained optimistic for production over the next 12 months, supported by stronger demand, capacity investment, and government policies.

The RatingDog China General Manufacturing PMI rose to 52.1 in February 2026 from 50.3 in January, the highest since December 2020 and marking a third straight month of factory expansion. Output grew the most since June 2024, while new orders increased for a ninth month, with growth the strongest since December 2020. Foreign demand saw its sharpest rise since September 2020. Backlogs increased and employment edged up for a second month, the first back-to-back rise since mid-2021. Buying activity expanded at the fastest pace since November 2024, lifting input stocks as supplier delivery times shortened slightly. Input cost inflation rose to its highest since June 2022, partly due to higher metal prices, though still below the long-run average. Output price inflation hit a 15-month high, while confidence rose to an 11-month peak. The result differed from an official survey showing factory activity contracted for a second month in February.

The RatingDog China General Manufacturing PMI increased to 50.3 in January 2026 from December’s reading of 50.1, in line with market forecasts. The latest reading indicated a slight expansion in factory activity but the fastest growth since last October, as output growth accelerated modestly amid higher new orders, supported by a fresh rise in new export orders. In response to rising new orders and production, firms raised their staffing levels for the first time in three months, albeit only marginally. Purchasing activity increased, while supply conditions were unchanged. Regarding prices, input cost inflation accelerated to its highest level since last September due to higher metal prices. As a result, selling prices rose for the first time since November 2024. Looking ahead, business sentiment weakened to a nine-month low amid concerns over the outlook for economic growth and rising cost pressures.