According to data released by China’s National Bureau of Statistics on March 31, the country’s manufacturing and services activity contracted in March.
The official manufacturing Purchasing Managers’ Index (PMI) decreased to 49.5 from 50.2 in February, falling into the contraction range for the first time in five months.
At the same time, the non-manufacturing PMI in March went down by 3.2% to 48.4, which was below the 50-point threshold for the first time since September 2021.
The composite PMI output index was 48.8 in March, 2.4 percentage points lower than the previous month, indicating that the level of prosperity of China’s business production and operations has declined.
The statistics bureau also concluded that both supply and demand in the manufacturing industry were weak as in March, the production index and new order index recorded 49.5 and 48.8, down 0.9% and 1.9%, respectively, from the previous month. Both were the lowest since November 2021.
In terms of external demand, the new export orders and import index of manufacturing in March were 47.2 and 46.9, respectively, 1.8% and 1.7% lower than in February. This indicates that foreign trade activities had further contracted in the month.
Zhao Qinghe, a senior statistician of the statistics bureau, said, “Recently, clusters of epidemic outbreaks have occurred in many places in China, and coupled with a significant increase in global geopolitical instability, production and operation of Chinese enterprises have been affected.”
March marked the return of large-scale community closures to several areas in China. That included the entire Jilin province and technology hub Shenzhen. China’s financial hub, Shanghai, entered lockdown in late March, expected to remain at least in the first week of April.
Zhiwei Zhang, the chief economist at Pinpoint Asset Management, told Reuters, “As the Shanghai lockdown only happened in late March, economic activities will likely slow further in April.”