Greater China manufacturing expands in March despite rising input costs

PMI rebounds as new orders and output rise, whilst purchase prices hit its highest level since 2022.

Greater China’s manufacturing sector returned to expansion in March as the manufacturing PMI rose to 50.4, up 1.4 points from February and above Bloomberg’s consensus of 50.1, according to Singapore-based brokerage firm UOB Kay Hian.

UOB Kay Hian’s found that new orders increased to 51.6, manufacturing output rose to 51.4, whilst new export orders improved to 49.1. Backlog orders also reached 47.1, and business expectations advanced to 53.4.

Despite the rebound, input costs surged sharply with purchase prices jumping to 63.9, the highest since 2022, whilst output prices rose to 55.4.

Inventories of finished goods remained low at 46.7, reflecting strong demand absorption whilst employment also edged up to 48.6, and suppliers’ delivery times measured 49.5.

The non-manufacturing PMI also returned to expansion, climbing to 50.1, above Bloomberg’s estimate of 49.9.

Services activity improved to 50.2, whilst construction remained below the expansion threshold at 49.3. New export orders in services increased to 48.8, but domestic demand indicators showed continued softness, with composite new orders at 45.0 and employment at 45.2.

Performance by enterprise size showed small-sized enterprises leading the recovery at 49.3.

Medium-sized enterprises improved to 49.0 but remained in contraction, whilst large-sized enterprises continued solid expansion at 51.6.

UOB Kay Hian highlighted that whilst the rebound in new orders and export demand is positive, rising input costs and persistent weakness in construction remain key concerns.