The Caixin China General Manufacturing PMI rose to 51.2 in March 2025, up from February’s 50.8 and surpassing expectations of 51.1. This marked the highest reading since last November, signaling a continued recovery in the Chinese manufacturing sector.
China manufacturing growth hits four-month high
The improvement in the index reflected a stronger pace of output growth, driven by a sustained increase in new orders amid improving demand conditions both domestically and internationally.
In particular, foreign sales saw the most significant growth in 11 months, suggesting a pick-up in global demand for Chinese goods, particularly in key markets. In response to the rise in orders, firms increased their buying levels, leading to a renewed rise in stock purchases as manufacturers looked to secure materials ahead of further demand. However, despite this positive trend, employment levels increased only marginally for the first time since August 2023, reflecting the cautious approach taken by firms in adjusting their workforce.
Backlogs continue to accumulate
Backlogs continued to accumulate, indicating that demand was still outpacing the sector’s ability to fulfill orders, which helped keep the PMI in positive territory for the sixth consecutive month. Delivery times also lengthened for the first time since last October, largely due to ongoing shipping delays and disruptions in global supply chains, a reminder that logistics bottlenecks remain a challenge despite overall improvement in demand.
On the cost side, input prices fell for the first time in six months, driven by lower raw material costs, which provided some relief to manufacturers facing rising production expenses. However, in the face of greater market competition, output prices dropped for the fourth consecutive month, as firms sought to maintain competitiveness and stimulate demand amid persistent pricing pressures.
Business confidence weakens
Despite the improvements in several key areas, business confidence weakened, reflecting rising uncertainties, particularly around global trade barriers and geopolitical tensions. While the manufacturing sector showed signs of recovery, these concerns about external risks, including the potential impact of trade restrictions and tariff policies, were dampening optimism for sustained growth in the months ahead. Manufacturers are likely to remain cautious, balancing the need for expansion with the risks posed by an unpredictable global trade environment.
