China’s factory activity returns to growth, expanding at its sharpest pace in a year
LIANYUNGANG, CHINA – FEBRUARY 28: Workers produce stuffed toys for export at a toy factory in Lianyungang, China’s Jiangsu Province, on February 28, 2026.
Si Wei | Visual China Group | Getty Images
China’s official gauge of manufacturing activity rises further Export orders showed a strong momentum, showing their best performance in a year in March, leaving behind the declines experienced for two months.
Manufacturing Purchasing Managers’ Index rose to 50.4 in March. According to the Office for National Statistics on Tuesday.It surpassed economists’ expectations of 50.1 in a Reuters survey. Values below 50 indicate contraction, while levels above this threshold indicate expansion.
This expansion marked a significant recovery after two months of contraction; the official figure was 49.3 and 49.0 in January and February respectively. In March last year, this rate was 50.5.
In China’s latest manufacturing PMI, sub-indices showed that production and new orders increased, while measurements of raw material stock, employment and delivery time continued to shrink.
NBS chief statistician Huo Lihui said manufacturing activity in March gained momentum as factories tried to restart production after the long national holiday in mid-February.
Non-manufacturing PMI, which measures activity in the services sector such as tourism, rose from 49.5 to 50.1 in February.
Middle East war clouds view
Rising shipping fees and costs for imported commodities, including crude oil and chemicals, triggered by the ongoing conflict in the Middle East, are putting further pressure on companies surveyed by NBS, Huo said. Price indices tracking raw material inputs and ex-factory prices increased by 63.9% and 55.4%, respectively.
Cameron Johnson, senior partner at Shanghai-based consulting firm Tidalwave Solution, said that many factory owners in China expect the outage to be short-lived, leaving behind a period of about six weeks of high prices and supply shortages, as US President Donald Trump plans a visit to China in May to meet with Chinese leader Xi Jinping.
Johnson said demand for Chinese-made solar panels and batteries from foreign buyers, particularly from Europe, India and East Africa, has increased in recent weeks as China appears somewhat insulated from a supply shock due to large stockpiles.
“[But] if we are talking about the same thing [disruption] “Come May, this is going to be a really big problem,” Johnson said.
China’s exports in the first two months of this year It rose 21.8% from the previous year, sharply beating expectations, as strong demand from Southeast Asia and Europe more than offset the decline in shipments to the United States.
A separate private survey PMI by RatingDog and S&P Global will be released on Wednesday and is expected to fall to 51.6 in March from a 5-year high of 52.1 in February, according to a Reuters poll.
