China manufacturing PMI slows in March as export orders cool

Activity in China's manufacturing sector slowed last month as orders for export sales rose at the their weakest pace for three months.

Caixin's factory sector purchasing managers' index slipped from a reading of 51.7 for February to 51.2 for March (consensus: 51.7).

Levels of production and new orders both grew more slowly, with the latter softer in large part due to the weaker growth in export orders, Caixin said.

"Although pointing to only a modest rate of improvement, the latest index reading remained amongst the highest seen over the past four years," the survey compiler said in a statement.

Staff numbers were cut for a forty-first month in a row, but the reduction was again dubbed "marginal" amid new signs of capacity pressures, while the increase in order backlogs was "modest".

On a more cautious note, firms in the sector adopted a more cautious stance towards inventory building, with a slight decline in stocks of purchases and inventories falling at their quickest clip in 10 months, albeit only modestly.

Input price inflation on the other hand slowed at the end of the first quarter, but "remained sharp overall", with output charges continuing to rise but doing so at their slowest pace in six months.

Business sentiment towards the 12-month outlook weakened slightly from February's peak but nevertheless remained optimistic.

"Confidence was partly linked to new product releases and forecasts of stronger market demand."

Commenting on the China General Manufacturing PMI data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said: "Overall, the Chinese manufacturing economy continued to improve, but signs of a weakening have started to emerge ahead of the second quarter. Downward pressure may further increase."