Lianyungang, China – February 28: Employees produce stuffed animals for export at a toy factory in Lianyungang, Jiangsu Province, China, on February 28, 2026.
Siwei | Visual China Group | Getty Images
Official indicators of China’s manufacturing activity rose more than expected in March, marking the best performance in a year and erasing two months of decline as export orders showed strong momentum.
The Manufacturing Purchasing Managers Index for March, the Office for National Statistics released on Tuesday, rose to 50.4, beating the 50.1 expected by economists polled by Reuters. Measurements below 50 indicate contraction, and levels above that threshold indicate expansion.
The expansion marked a marked recovery after two months of contraction, with official figures for January and February at 49.3 and 49.0, respectively. As of March last year, it was 50.5.
In China’s latest manufacturing PMI, sub-indices showed that production and new orders are expanding, while indicators on raw material inventories, employment and delivery times are still contracting.
NBS chief statistician Huo Lihui said manufacturing activity gained momentum in March as factories rushed to restart production after the long holiday in mid-February.
The non-manufacturing PMI, which measures activity in service sectors such as tourism, was 50.1, up from 49.5 in February.
Outlook for war clouds in the Middle East
Huo said rising transportation costs and costs for imported goods, including crude oil and chemicals, stemming from the ongoing Middle East conflict, are further weighing on companies surveyed by NBS. The price index, which tracks raw material inputs and ex-factory prices, rose 63.9% and 55.4%, respectively.
With U.S. President Donald Trump planning a trip to China in May to meet Chinese leader Xi Jinping, many factory owners in China expect the disruption to be short-lived, leaving soaring prices and supply problems for about six weeks, said Cameron Johnson, a Shanghai-based senior partner at consulting firm Tidal Wave Solutions.
Johnson said China appears to be somewhat insulated from supply shocks because of its large stockpiles, and inquiries for Chinese-made solar panels and batteries have increased in recent weeks from overseas buyers, particularly from Europe, India and East Africa.
“(But) if the same (disruption) continues into May, that’s going to be a really big problem,” Johnson said.
In the first two months of this year, China’s exports rose 21.8% from a year earlier, well above expectations, with strong demand from Southeast Asia and Europe more than making up for sluggish shipments to the United States.
The PMI, a separate private survey conducted by Rating Dog and S&P Global, is expected to be released on Wednesday and is expected to fall to 51.6 in March from a five-year high of 52.1 in February, according to a Reuters poll.
