Goldman Sachs: China — Both Official Manufacturing and Non-Manufacturing PMIs Rebounded in March
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China's official manufacturing PMI rose to 50.4 in March from 49.0 in February, edging past the Bloomberg consensus of 50.1 but slightly missing Goldman Sachs' forecast of 50.5. The non-manufacturing PMI climbed to 50.1 from 49.5, aligning with expectations. The new orders sub-index was the primary growth driver, surging to 51.6 from 48.6, while the output sub-index improved to 51.4. Notably, input prices jumped to 63.9—the highest since early 2022—driven by surging oil and chemical costs linked to Middle East geopolitical conflicts, with output prices also rising to 55.4.
Within non-manufacturing sectors, the services PMI recovered to 50.2, showing divergence as telecom and financial services exceeded 55, while consumer-facing segments like hospitality and retail remained below 50. The construction PMI improved to 49.3 but stayed in contraction, as project restorations remained gradual.
Goldman Sachs cautioned that a late Lunar New Year likely inflated the March readings. Evaluating the first quarter holistically reveals a slightly improved manufacturing sector, broadly flat services activity, and persistently declining construction. Concurrently, surging input costs reflect intensifying pressure on corporate margins, underscoring an uneven economic recovery with mixed underlying momentum.