Core Viewpoint - The significant rebound in the March PMI is attributed to the fading effects of the Spring Festival and accelerated demand recovery [3][9]. Manufacturing PMI - The manufacturing PMI rose to 50.4% in March, up 1.4 percentage points from the previous month, reflecting a recovery post-Spring Festival [2][3]. - The new orders index increased by 3 percentage points to 51.6%, indicating stronger demand recovery compared to previous years [3][16]. - The production orders index only rose by 1.8 percentage points to 51.4%, suggesting slower recovery in production due to delayed resumption of work [3][16]. Industry Analysis - The consumer goods sector saw a larger PMI increase of 2 percentage points to 50.8%, indicating a faster demand recovery compared to other sectors [4][20]. - The equipment manufacturing and high-tech manufacturing PMIs increased by 1.7 and 0.6 percentage points to 51.5% and 52.1%, respectively, but showed weaker production performance [4][21]. Non-Manufacturing PMI - The non-manufacturing PMI rose to 50.1%, with the construction sector's PMI increasing by 1.1 percentage points to 49.3%, which is lower than the previous year's recovery rate [4][24]. - The construction project resumption rate was 62%, down 2.6 percentage points from the same period in 2025, indicating slower recovery in the sector [4][24]. Future Outlook - The focus on expanding domestic demand and promoting consumption is expected to enhance the recovery of domestic demand, which may outpace external demand [5][34]. - However, rising oil prices due to geopolitical risks could negatively impact manufacturing profitability, with a transmission lag of about 3-4 months [5][34]. Regular Tracking - The manufacturing PMI showed a recovery, with the new orders index rising significantly [6][43]. - The service sector PMI increased slightly to 50.2%, but the new orders index fell by 0.4 percentage points to 45.3% [6][52]. - The construction sector's new orders index improved marginally by 1.3 percentage points to 43.5% [6][54].

Manufacturing Sector - The manufacturing PMI for March 2026 is reported at 50.4%, an increase of 1.4 percentage points from the previous month, indicating a return to the expansion zone[2][4] - The production index rose by 1.8 percentage points, while the new orders index increased by 3.0 percentage points, reflecting a positive trend in manufacturing activities[4][12] - The proportion of companies reporting insufficient demand decreased to 48.5%, down 6.6 percentage points from the previous month, marking the first drop below 50% since July 2022[12] External Demand and Trade - The new export orders index surged to 49.1%, up 4.1 percentage points from the previous month, indicating a significant improvement in external demand[18] - The import orders index also rose to 49.8%, reflecting a synchronized recovery in trade activities[18] Price Trends - The raw material purchase price index increased by 9.1 percentage points to 63.9%, outpacing the factory price index, which rose by 4.8 percentage points to 55.4%, indicating rising cost pressures for businesses[21] - Both raw material and finished goods inventory indices saw a slight increase, with raw material inventory rising to 47.7% and finished goods inventory to 46.7%[22] Service Sector - The service sector PMI improved to 50.2%, a 0.5 percentage point increase from the previous month, driven by post-holiday resumption of work[24] - Key sectors such as transportation and financial services showed strong business activity indices above 55.0%, while retail and hospitality sectors experienced a decline[24]

1. Report Industry Investment Rating - Not provided in the given content 2. Core Viewpoints of the Report - In March 2026, the manufacturing PMI rebounded beyond expectations, indicating an economic recovery, but the recovery strength is average and the expectations are cautious. Without considering external uncertainties, the prices of domestically - priced commodities are expected to rise. The manufacturing PMI in April 2026 is likely to decline, which is a crucial observation window [4][5][6]. - In March 2026, the non - manufacturing PMI rose, but multiple sub - items are at historically low levels, and the non - manufacturing industry is still in the bottom - building process. The construction industry is still in a downward trend, but the sales price sub - item has bottomed out [29][32]. 3. Summary by Relevant Catalogs Part 1: Review of China's Manufacturing and Non - manufacturing PMI Data Tables - Manufacturing PMI: In March 2026, all sub - items of the manufacturing PMI increased compared to February. The significant increases include the purchase price of main raw materials (up 9 to 63.9), ex - factory price (up 4.8 to 55.4), import (up 4.2 to 49.8), new export orders (up 4.1 to 49.1), and new orders (up 3 to 51.6) [3][4]. - Non - manufacturing PMI: In March 2026, the business activity of non - manufacturing PMI was 50.1, up 0.6 from the previous month. The sub - items with relatively large increases were new export orders, input prices, sales prices, and delivery time. The sub - items with relatively large decreases were domestic demand, inventory, business activity expectations, and employees [3][29]. Part 2: March Manufacturing PMI Reflects Economic Service Beyond Expectations - Manufacturing PMI reached 50.4 in March 2026, up 1.4 from the previous month, higher than the market expectation of 50.1, and above the 50 boom - bust line again after two months. All sub - items increased, indicating an economic recovery. However, some key sub - items are still below 50, and some sub - items are at the second - lowest or lowest levels in the same period since 2018. The economic recovery is influenced by factors such as the arrival of the demand peak season, economic improvement, and price increases due to the Middle East conflict. The recovery strength is average, and expectations are cautious. The prices of domestically - priced commodities are expected to rise. In April 2026, the manufacturing PMI is likely to decline, which is a crucial observation window [4][5][6]. Part 3: Multiple Sub - items of March Non - manufacturing PMI are at Historically Low Levels - In March 2026, the non - manufacturing PMI business activity was 50.1, up 0.6 from the previous month and higher than the expected 49.9, returning above 50 again after two months. The sub - items of non - manufacturing PMI showed mixed trends. The new orders and domestic demand sub - items decreased against the season, indicating that the non - manufacturing industry is still in the bottom - building process. Some sub - items are at the lowest or second - lowest levels in the same period over the years. The construction industry PMI shows a downward trend, but the sales price sub - item has bottomed out, suggesting that the housing price may be stabilizing, but the sustainability needs to be observed [29][32].

Core Viewpoint - In March 2026, China's Purchasing Managers' Index (PMI) returned to the expansion zone, indicating a recovery in economic sentiment with manufacturing PMI at 50.4%, non-manufacturing business activity index at 50.1%, and composite PMI output index at 50.5% [1]. Group 1: Manufacturing PMI - The manufacturing PMI rose to 50.4% in March, reflecting increased market activity as companies resumed operations post-Spring Festival [2]. - Both production index and new orders index improved, reaching 51.4% and 51.6% respectively, indicating accelerated production activities and improved market demand [2]. - Large, medium, and small enterprises all saw a rise in PMI, with large enterprises at 51.6%, medium at 49.0%, and small at 49.3%, showing significant improvement in sentiment for smaller firms [2]. Group 2: Key Industries - High-tech manufacturing PMI stood at 52.1%, marking 14 consecutive months above the critical point, indicating a positive development trend [3]. - Equipment manufacturing and consumer goods industries also showed expansion with PMIs of 51.5% and 50.8% respectively [3]. - The price index for major raw materials surged, with purchasing price index at 63.9% and factory price index at 55.4%, reflecting a significant increase in market prices [3]. Group 3: Non-Manufacturing PMI - The non-manufacturing business activity index rose to 50.1%, indicating an improvement in the non-manufacturing sector [5]. - The service sector's business activity index reached 50.2%, with certain industries like telecommunications and financial services showing strong growth [5]. - The construction industry also saw an improvement, with a business activity index of 49.3%, reflecting a recovery in construction projects post-holiday [5]. Group 4: Composite PMI - The composite PMI output index increased to 50.5%, indicating an overall positive trend in production and business activities across sectors [6]. - The manufacturing production index and non-manufacturing business activity index contributed to this increase, standing at 51.4% and 50.1% respectively [6].

Group 1: PMI Overview - The manufacturing PMI for March is reported at 50.4%, up from 49% in February, indicating a significant rebound[1][7] - The non-manufacturing PMI stands at 50.1%, an increase from 49.5% in the previous month[1][7] Group 2: Factors Influencing PMI - The rebound in March PMI is attributed to the end of the Spring Festival disruptions and accelerated demand recovery[2][8] - The manufacturing PMI increased by 1.4 percentage points month-on-month, while the actual PMI, excluding weather-related supplier delivery impacts, rose by 1.5 percentage points to 50.3%[2][8] Group 3: New Orders and Production - The new orders index rose by 3 percentage points to 51.6%, surpassing the typical recovery seen in previous years after the Spring Festival[2][9] - The production orders index increased by only 1.8 percentage points to 51.4%, indicating slower recovery in production compared to new orders[2][9] Group 4: Sector Performance - The consumer goods sector's PMI increased by 2 percentage points to 50.8%, reflecting a faster recovery in demand compared to other sectors[3][15] - The equipment manufacturing and high-tech manufacturing PMIs rose by 1.7 and 0.6 percentage points, respectively, indicating weaker production performance despite new orders increasing by over 2 percentage points[3][15] Group 5: Non-Manufacturing Sector Insights - The construction PMI rose by 1.1 percentage points to 49.3%, but this is lower than the typical recovery seen in previous years, reflecting slow post-holiday resumption of work[3][18] - The service sector PMI saw a slight increase of 0.5 percentage points to 50.2%, with the new orders index declining by 0.4 percentage points to 45.3%[3][39]

Group 1: Manufacturing PMI Insights - In March, the Manufacturing Purchasing Managers' Index (PMI) rose to 50.4%, indicating a return to the expansion zone, driven by increased market activity post-Spring Festival [4] - Both production index and new orders index improved, reaching 51.4% and 51.6% respectively, reflecting accelerated production activities and improved market demand [4] - Large, medium, and small enterprises all showed PMI increases, with large enterprises at 51.6%, medium at 49.0%, and small at 49.3%, indicating a general improvement in economic conditions [4][5] Group 2: Sector-Specific Performance - High-tech manufacturing PMI reached 52.1%, marking 14 consecutive months above the critical point, indicating a positive development trend [5] - The equipment manufacturing and consumer goods sectors also saw PMIs of 51.5% and 50.8%, respectively, both entering the expansion zone [5] - The price indices for major raw materials and factory prices significantly increased to 63.9% and 55.4%, respectively, due to rising commodity prices and increased procurement activities [5] Group 3: Non-Manufacturing PMI Insights - The Non-Manufacturing Business Activity Index rose to 50.1%, showing an improvement in the non-manufacturing sector's economic conditions [7] - The service sector's business activity index reached 50.2%, with significant growth in sectors like rail transport and financial services, while retail and hospitality lagged behind [7] - The construction sector's business activity index improved to 49.3%, with a positive outlook for future activities as indicated by a business activity expectation index of 50.5% [7] Group 4: Comprehensive PMI Overview - The Comprehensive PMI Output Index increased to 50.5%, indicating an overall improvement in production and business activities across sectors [8] - The manufacturing production index and non-manufacturing business activity index contributed to this increase, standing at 51.4% and 50.1% respectively [8]

Economic Indicators - The manufacturing PMI for March is 50.4%, an increase of 1.4 percentage points from February, indicating a return to the expansion zone[1] - The equipment manufacturing PMI is 51.5%, up 1.7 percentage points, while the basic raw materials PMI is 48.9%, up 1.1 percentage points[1] - The consumer goods PMI reached 50.8%, a rise of 2.0 percentage points, marking the highest value since 2025[1] Demand and Supply Dynamics - The new orders index for March is 51.6%, increasing by 3.0 percentage points, while the new export orders index rose by 4.1 percentage points to 49.1%[5] - The production index is at 51.4%, up 1.8 percentage points, indicating a positive trend in manufacturing output[5] - The supplier delivery time index is at 49.5%, showing a slight increase of 0.4 percentage points, reflecting improved supply chain conditions[5] Cost Pressures - The main raw materials purchase price index is at 63.9%, a significant rise of 9.1 percentage points, indicating increased cost pressures[8] - The manufacturing output price index is above the neutral line at 55.4%, with a month-on-month increase of 4.8 percentage points[8] - Geopolitical factors, particularly in the Middle East, have led to significant increases in the prices of oil and chemical raw materials, contributing to higher logistics costs[8] Sector Performance - In March, the black metal, petroleum refining, and chemical industries all reported purchase price indices above 70.0%, indicating heightened cost pressures due to geopolitical factors[2] - Despite the cost pressures, these industries saw a notable increase in order volumes, suggesting a potential "panic buying" effect that may alleviate some cost burdens on midstream manufacturing[2]

Report Title - China PMI Observation Report, March 6, 2026: Bright Domestic Demand in the Off - season - February China PMI Observation [1] 1. Report Industry Investment Rating - Not provided 2. Core Viewpoints - In February 2026, both manufacturing and non - manufacturing PMIs were below 50, showing economic weakness. However, domestic demand in both sectors was a highlight. The domestic demand in the manufacturing sector reached the highest level since April 2025 and the second - highest in the same period in history, and in the non - manufacturing sector, it reached the highest level since May 2025. With the arrival of the peak season in March, economic data is expected to improve [4][6][30] 3. Summary by Directory 3.1 China Manufacturing and Non - manufacturing PMI Data Table Review - **Manufacturing PMI**: In February 2026, it was 49, down 0.3 from the previous month and lower than the market expectation of 49.2. Most sub - items decreased, such as the finished - product inventory sub - item (down 2.8 to 45.8), new export orders (down 2.8 to 45), etc. Only the production - operation expectation, raw - material inventory, and domestic demand sub - items increased [3][4] - **Non - manufacturing PMI**: In February 2026, the business activity index was 49.5, up 0.1 from the previous month but lower than the expected 49.7. Most sub - items declined, while the input price, inventory, business activity, and domestic demand sub - items increased [3][30] 3.2 February Manufacturing PMI Reflects Economic Weakness - **Overall Situation**: The manufacturing PMI has been below 50 for two consecutive months. Most sub - items decreased, with only three sub - items increasing. Domestic demand was at a historically high level, which was the biggest highlight in the February data during the manufacturing off - season [4][6] - **Seasonality**: Manufacturing PMI, production, finished - product inventory, new orders, and new export orders were at the lowest levels in history (except 2020), while domestic demand was at the highest in the same period in history (except 2019) [6] - **Enterprise and Industry Differences**: Small and medium - sized enterprise PMIs declined, especially small enterprises, which were at the worst level since 2023. Large enterprise PMI increased, reaching the second - highest since November 2024. Among industries, the consumer goods industry recovered in February, while high - tech manufacturing, equipment manufacturing, and basic raw material industries declined [6] - **Outlook**: Due to the late Spring Festival in 2026, the decline in January and February data was affected by seasonality. Starting from March, the peak season will come, and data is expected to improve [7] 3.3 February Non - manufacturing PMI: Domestic Demand is also a Bright Spot - **Overall Situation**: The non - manufacturing PMI business activity was below 50 for two consecutive months. Most sub - items decreased, and the domestic demand sub - item increased, reaching the highest level since May 2025, going against the off - season trend [30] - **Seasonality**: In February, sub - items such as business activity, new orders, export orders, and construction and service industry PMIs were at the lowest levels in the same period in history (except 2020) [30][32] - **Construction Industry**: The construction industry PMI continued to decline, but the selling - price sub - item had bottomed out, indicating that housing prices may be stabilizing, but the sustainability needs to be observed [32]

Core Viewpoint - The manufacturing PMI has marginally declined due to seasonal disruptions from the longest Spring Festival holiday in history, with input inflation being a key concern moving forward [1][2]. Manufacturing Sector - In February 2026, the manufacturing PMI stood at 49.0%, down 0.3 percentage points from the previous month, indicating a lower-than-average performance for this time of year due to the holiday disruption [2]. - The production index was notably affected, particularly impacting small and medium-sized enterprises, while high-tech manufacturing remains in the expansion zone [2]. - The consumer goods sector's PMI increased to 48.8%, up 0.5 percentage points from last month, driven by consumption policies [2]. Supply and Demand Index - The supply and demand index experienced a seasonal decline, with new export orders showing a significant drop, although domestic demand remains relatively stable when seasonal factors are excluded [3]. - Industries such as agricultural processing and computer communication equipment are expanding, while textiles and automotive sectors remain below the critical point [3]. - The purchasing price index for raw materials has slightly decreased, while factory prices remain stable, potentially improving revenue expectations for businesses [3]. Non-Manufacturing Sector - The service sector showed stable performance with a slight increase in the business activity index, although there is significant structural differentiation [3]. - Industries related to consumer travel, such as accommodation and dining, are experiencing rapid growth, while capital market services and real estate are operating at low levels [3]. - The construction sector's business activity index has marginally declined due to the holiday, with some projects temporarily halted [3]. Future Outlook - The macroeconomic policy is expected to be more proactive, with a focus on supporting overall demand [4]. - The Central Political Bureau has indicated a commitment to more active fiscal policies and moderately loose monetary policies, with potential for further interest rate cuts [4]. - There will be an emphasis on boosting consumption and expanding investment, including infrastructure projects like parking lots and charging stations [4].

Group 1: Manufacturing Sector Insights - Manufacturing PMI in February was 49%, a decrease of 0.3 percentage points from January, primarily affected by the production side and seasonal factors[5] - New export orders PMI fell to 45%, the lowest level since April 2025, indicating significant weakness in overseas demand compared to domestic demand[9] - The decline in new export orders is attributed to a combination of extended Chinese New Year holidays and reduced effective working days, impacting production schedules[9] Group 2: Infrastructure and Non-Manufacturing Sector - Non-manufacturing sector showed a slight recovery with a service sector PMI of 49.7%, up 0.2 percentage points from January, driven by increased consumer spending during the holiday[14] - Construction PMI dropped to 48.2%, but the business activity expectation index rose to 50.9%, indicating optimism for post-holiday infrastructure activities[14] - The civil engineering sector's business activity expectation index exceeded 54%, reflecting a positive outlook for infrastructure investment[14] Group 3: Geopolitical and Economic Factors - Ongoing geopolitical tensions are expected to favor resource commodities over technology sectors, with inflation expectations rising and market predictions for U.S. interest rate cuts being delayed[16] - The market's expectation for U.S. rate cuts shifted from June and September to July and December, indicating tightening liquidity conditions[16] - Risk factors include slow consumer confidence recovery, policy implementation falling short of expectations, and potential escalation of trade tensions[20]