PMI Quarterly On China Manufacturing – Issue 64 (April 2026)

PMI points to recovery after early slump in the manufacturing sector in 1Q26

Our observations

• Large enterprises are experiencing faster growth, while small and medium enterprises continue to contract, albeit at a slower pace.
• Manufacturing output has begun to expand again.
• Overall market demand is recovering.
• Manufacturers are raising ex-factory prices in response to rising input costs.
• Employment in the manufacturing sector has seen a slight decline.

Policy outlook

• The Government Work Report released in March reiterated a policy stance characterized by “more proactive and effective macro policies”.
• China will continue to implement a more proactive fiscal policy and an appropriately accommodative monetary policy.
• We expect the Chinese government to maintain policy support in 2Q26, which will help the economy navigate external challenges and sustain steady growth.

Our forecasts for 2Q26

• We project stable growth in manufacturing production. While higher crude prices are raising costs for downstream sectors, which hampers industrial capacity utilization, an improving external demand should benefit exports and industrial production.
• Headline PMI is likely to hover around 50.0.
• VAIO growth is expected to reach 5.0%-5.5% yoy.
• Real GDP growth is projected at 4.8% yoy.
• Exports are expected to see single-digit growth.
• Year-on-year growth rates for the purchaser price index and the PPI will continue to rise, driven by increases in global crude prices and a low comparison base in 2Q25.