China Composite PMI Pulls Back from 3-Month Peak

China’s NBS Composite PMI Output Index slipped to 50.1 in April 2026 from March’s three-month high of 50.5, signaling near-stagnation in overall business activity. A contraction in the services sector outweighed continued resilience in manufacturing output, while escalating Middle East tensions added uncertainty by stoking concerns over higher oil prices, supply-chain disruptions, and weaker global demand. The latest result came as China prepares for a May summit between President Xi Jinping and U.S. President Donald Trump, where Beijing is expected to seek clarity around U.S. trade penalties on Chinese goods. The two leaders met last year in Busan, South Korea, where they agreed to a trade truce that saw Washington cut the overall tariff rate on Chinese goods to about 47%, while Beijing pledged to suspend sweeping export controls on rare earths.

China’s NBS Composite PMI Output Index rose to 50.5 in March 2026 from 49.5 in the previous month, marking the highest reading since December and returning to expansion territory. The improvement was driven by a rebound in manufacturing output, as firms resumed operations after the Spring Festival and supply chains and labor availability gradually normalized. The services sector also recovered after two months of contraction, supported by policy measures and steady business sentiment. Still, escalating Middle East tensions pose risks: higher energy prices and potential shipping disruptions could lift input costs and weigh on external demand, particularly for exporters. NBS statistician Huo Lihui noted that overall production and operations among Chinese enterprises were improving, signaling a broader recovery across sectors despite lingering external uncertainties.

China’s NBS Composite PMI Output Index fell to 49.5 in February 2026 from 49.8 in the previous month, indicating that the overall production and operation activities of Chinese enterprises slowed down. The latest figure also marked the lowest reading since December 2022, with manufacturing activity slipping to a four-month low as factories paused production and shipments due to the week-long holiday. NBS statistician Huo Lihui blamed the longer-than-usual holiday for the softening manufacturing activity, saying companies’ production and operations were affected to some extent. Meanwhile, the services sector increased slightly as the holiday boosted travel, entertainment activities, and duty-free shopping, marking the longest holiday on record as Chinese authorities sought to stimulate consumer spending.