The Caixin China General Composite PMI rose to 51.8 in March 2025 from 51.5 in February, marking its highest level since last November. This represented the 17th consecutive month of growth in private sector activity, signaling a steady recovery in the Chinese economy.
China composite PMI rises to four-month high
The expansion was particularly driven by a robust increase in manufacturing output, which reached its strongest pace in four months. At the same time, the service sector also saw a notable acceleration, with growth in the sector reaching a three-month peak. This broader expansion in both manufacturing and services suggests that the economic recovery is becoming more balanced.
The positive momentum was largely supported by a solid increase in new business inflows, including a notable rise in export orders. This uptick in demand from overseas markets provided a welcome boost to the manufacturing sector, helping to drive production and overall business activity. Backlogs of work also expanded for the second consecutive month, reflecting the ongoing buildup of uncompleted tasks and contributing to the overall strength of business sentiment.
Concerns on the employment front
However, there were some concerns on the employment front, as job shedding continued in the service sector, leading to a decline in overall employment levels. Despite the overall growth in business activity, the service industry experienced challenges in terms of hiring, which could be reflective of ongoing restructuring or cost-cutting measures within certain sectors.
On the pricing front, inflationary pressures remained subdued. Average charges fell for the fourth consecutive month, and input costs dropped at their fastest pace in nearly five years, though the decline was marginal. This softening in cost pressures may help ease some of the strain on businesses and consumers, further supporting the economic recovery.
Business confidence remains positive
Lastly, business confidence remained positive, with sentiment staying above the 2024 average. While there was a slight dip in confidence compared to February, the overall outlook remained optimistic. Firms seemed to maintain a degree of caution, perhaps due to the still-present uncertainties in the global market, but their overall expectations for future activity were still relatively upbeat. The resilience in business sentiment indicates that despite challenges, there is optimism about the longer-term prospects for the Chinese economy.
