RatingDog China Manufacturing PMI Pulls Back in March, but Q1 Manufacturing Activity Still Improves

Overview

This report focuses on China’s unofficial RatingDog Manufacturing PMI for March. The core conclusion is that although the March RatingDog Manufacturing PMI fell from 52.1 in February to 50.8, with relatively large declines in the output and new orders sub-indices, the reading remained in expansionary territory; combined with the improvement in the NBS Manufacturing PMI, the two indicators overall point to improved manufacturing activity in Q1 2026, along with rising manufactured goods prices.

Core views

Goldman Sachs believes the March pullback in RatingDog Manufacturing PMI does not mean that the manufacturing trend is weakening structurally. The divergence between the NBS Manufacturing PMI and the RatingDog Manufacturing PMI more likely reflects the timing mismatch of the Lunar New Year holiday and residual seasonality: the later Lunar New Year depressed the February NBS PMI and boosted the March rebound, while the February RatingDog PMI may have benefited from residual seasonality before easing in March. Taken together, manufacturing activity improved in Q1, and the rise in the price sub-indices suggests stronger cost and ex-factory price pressures.

Analysis framework

The report centers on RatingDog China Manufacturing PMI and its major sub-indices, compares the March and February readings, and explains the divergence between the two PMI series by combining it with the NBS Manufacturing PMI trend. The analysis focuses on the headline index, output, new orders, employment, supplier delivery times, export orders, inventories, and input and output prices.

Methodology notes

• Macro cycle trackingManufacturing PMI diffusion index

  A PMI uses 50 as the breakeven line; readings above 50 generally indicate month-on-month expansion, while readings below 50 generally indicate contraction.

  This report uses the headline PMI and subcomponents such as output, new orders, employment, inventories, and prices to gauge marginal changes in manufacturing activity, demand, supply chain conditions, and price pressure.

• Seasonality explanationLunar New Year timing mismatch and residual seasonality

  Changes in the timing of the Lunar New Year affect the pace of China’s monthly economic surveys, leading to non-trend fluctuations in adjacent months’ PMI readings.

  The report argues that the rise in the March NBS PMI and the decline in the RatingDog PMI likely mainly reflect different seasonal effects caused by the later Lunar New Year holiday, rather than the two surveys sending completely opposite signals on the manufacturing trend.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• China manufacturing activity

  Directly related

  Strengths

  The headline PMI remains above 50, and the combined reading of the NBS and RatingDog PMIs supports an improvement in manufacturing activity in Q1.

  Weaknesses

  March RatingDog PMI declined from February, and the output, new orders, and new export orders sub-indices all fell materially.

  Comparison

  Unlike the March increase in the NBS Manufacturing PMI, the RatingDog PMI fell; the report attributes the difference mainly to Lunar New Year timing and residual seasonality.

  Risks

  If PMIs continue to decline and fall below 50, the current view of Q1 improvement may need to be revised down.

• Manufactured goods prices

  Positive signal

  Strengths

  Both the input price and output price sub-indices rose sharply and reached their highest levels since March 2022.

  Weaknesses

  The rise in prices may reflect supply chain disruptions, input cost volatility, and capacity constraints, and may not fully correspond to an improvement in end demand.

  Comparison

  The input price sub-index at 57.0 was higher than the output price sub-index at 52.2, indicating stronger gains on the cost side.

  Risks

  If higher costs cannot be fully passed through, manufacturing profit margins could be squeezed.

Key data

• March RatingDog Manufacturing PMI50.8February was 52.1; Goldman Sachs forecast 51.0, Bloomberg consensus 51.5.
• Output sub-index50.8February was 53.6; one of the main downside subcomponents.
• New orders sub-index51.1February was 53.5; still in expansionary territory but down sharply.
• Employment sub-index50.3February was 50.1, showing a slight improvement.
• Supplier delivery times sub-index48.5February was 50.9, the lowest since December 2022; firms cited supply chain disruptions, input price volatility, and supplier capacity constraints.
• New export orders sub-index50.4February was 54.0, indicating slower export-order expansion momentum.
• Input price sub-index57.0February was 53.7, the highest since March 2022.
• Output price sub-index52.2February was 51.0, the highest since March 2022.

Impact & implications

For the macro outlook, the March data indicate that manufacturing activity remains in expansionary territory but momentum has slowed versus February, while price pressure has become more pronounced. For markets, this may reinforce the view that China’s manufacturing activity is recovering in Q1, while investors should monitor whether higher input costs pass through to ex-factory prices, corporate profit margins, and inflation expectations.

Risks

• Lunar New Year timing mismatch and residual seasonality may cause monthly PMI readings to deviate from the true trend.
• Supply chain disruptions, input price volatility, and supplier capacity constraints may continue to affect delivery times and costs.
• The decline in new export orders suggests a risk of slowing external demand momentum.
• If the rise in price sub-indices persists, it could create cost pressure and margin pressure.

What to watch

• Whether the RatingDog and NBS Manufacturing PMIs converge again in the coming months.
• Whether the output and new orders sub-indices can remain above 50.
• Whether new export orders continue to decline.
• The pass-through strength and persistence of the input price and output price sub-indices.
• Whether the supplier delivery times sub-index recovers from the low of 48.5.