China's March RatingDog Manufacturing Purchasing Managers' Index (PMI) report indicates the most significant inflationary pressure since March 2022. The latest PMI data, jointly released by S&P Global and RatingDog, shows the March reading came in at 50.8, marking the fourth consecutive month above the 50-point threshold that separates expansion from contraction. However, this represents a noticeable decline from the 52.1 recorded in February.
Concurrently, input cost inflation accelerated to its fastest pace since March 2022. Furthermore, the lengthening of supplier delivery times was the most substantial in over three years.
RatingDog founder Yao Yu commented that despite an overall stable domestic policy environment, persistent international geopolitical conflicts continue to drive up oil prices and heighten volatility in key raw material markets. He noted that this imported inflationary factor is expected to continue posing a "severe test" to manufacturers' costs in April.
**Expansion Momentum Slows, but Employment Sees Longest Growth Streak in Five Years**
All five sub-indices of the March PMI contributed positively to the headline index. New orders continued to increase, supported by improved market demand, customer acquisition, business expansion, promotional activities, and enhanced price competitiveness. However, the rate of expansion slowed from February's multi-year high, though it remained the second-fastest in the past six months. New export orders also increased, but at a weaker pace than the previous month. Output expanded for the fourth successive month, with growth seen among both consumer and intermediate goods producers, while output of investment goods remained largely stable. As the rate of output growth slowed while new orders continued to arrive, backlogs of work accumulated at a quicker rate. Companies attributed this to rising customer demand, capacity constraints, and staffing changes. Regarding employment, the manufacturing sector recorded a third straight month of job growth, representing the longest continuous recruitment period since mid-2021. Purchasing activity also expanded, though the pace of growth eased compared to February.
**Price Pressures Surge, Supply Chains Face Largest Disruption in Over Three Years**
The cost side presented the most prominent risk signal in the March report. The rate of input price inflation increased sharply, reaching the highest level since March 2022 and exceeding the survey's long-term average. Driven by this, output charge inflation also accelerated to a four-year high, likewise sitting above the historical average. On the supply chain front, vendor delivery times lengthened for the first time in five months, with the extent of deterioration being the greatest since December 2022. Companies attributed supplier delays to supply chain disruptions, high and increasingly volatile raw material prices, and limited supplier capacity. Regarding inventories, stocks of purchases increased marginally, consistent with the slower pace of output growth. Conversely, finished goods stocks declined slightly, indicating that firms utilized existing inventories to some extent to fulfill orders.
**Production Outlook Remains Optimistic Amid Complex Domestic and External Environment**
Despite rising cost pressures, surveyed manufacturers maintained a positive outlook for production over the coming 12 months. Sources of confidence included expectations of continued improvement in customer demand, planned investments in capacity and new products, efficiency gains, and anticipated government policy support. While the overall degree of optimism retreated from February's high, it remained stronger than the levels seen in December and January. Yao Yu pointed out that the macroeconomic environment presents a more complex picture for the manufacturing sector. Domestically, the 2026 Government Work Report set a GDP growth target within a flexible range of 4.5% to 5%, largely aligning with market expectations and reflecting a policy stance of "seeking progress while maintaining stability," which is expected to provide moderate support for manufacturing activity. Internationally, ongoing geopolitical conflicts are keeping oil prices elevated and exacerbating volatility and cost pressures in key raw material markets. The survey data for this report was collected between March 12 and March 23, 2026, from a panel of approximately 650 manufacturers, and was compiled jointly by RatingDog and S&P Global.