China Factory Growth Continued 4-Month Run Amid Price Pressures
By Reuters | 31 Mar, 2026

China's manufacturing sector enjoyed growth in both output and new orders but face sharply rising price pressures.

China's manufacturing sector expanded in March for a fourth straight month as output and new orders continued to grow, but rising price pressures sharply intensified, a private-sector survey showed on Wednesday.

The RatingDog China General Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, fell to 50.8 in March from 52.1 in February, missing analysts' forecast of 51.6. The 50-mark separates growth from contraction.

An official survey showed on Tuesday that factory activity grew at the fastest pace in a year in March, underpinned by improved demand.

New orders increased for a 10th straight month in March, the RatingDog survey showed. New export business also rose, but the pace slowed from February.

Production rose for a fourth consecutive month. Over the first quarter of 2026 as a whole, output growth was the fastest since the fourth quarter of 2024.

"Notably, cost pressures intensified significantly," said Yao Yu, founder at RatingDog.

Inflation pressures picked up sharply amid the war in the Middle East. Input costs rose at the fastest rate since March 2022, while output prices increased at their quickest pace in four years as manufacturers passed on higher costs.

A Chinese central bank adviser said on Tuesday that imported inflation stemming from the Middle East conflict will put pressure on China's economy, requiring policymakers to juggle rising inflation alongside slowing growth.

The S&P survey also showed supply chain strains intensified in March. Suppliers' delivery times lengthened for the first time in five months, and to the greatest extent since December 2022, with firms linking delays to disruptions, volatile input prices and supplier capacity constraints.

Employment rose at a quicker pace, as firms responded to rising orders and backlogs.

Outstanding business increased for a second straight month and at the fastest rate since last September.

Purchasing activity expanded for a third month, though more slowly than in February. Finished goods inventories, however, fell as some firms met orders from existing stock.

Manufacturers remained optimistic about production over the coming year, supported by expectations of stronger demand, investment in capacity and supportive government policies. But confidence softened from February's recent peak as firms navigated higher costs and longer lead times.

Economists warned an input-cost shock to the world's largest manufacturing base, which employs hundreds of millions, threatens to squeeze already thin margins, but added China is better shielded against the crisis than much of Asia or Europe.

(Reporting by Ellen Zhang and Ryan Woo; Editing by Sam Holmes)