These are the 2 culprits behind the sluggish improvement of March PMI

Inventories were also badly hurt.

According to CIMB, the Purchasing Managers’ Index (PMI) recorded a marginal drop of 0.1 pt to 50.8 in Mar (+0.4 pt to 50.9 in Feb), though this still indicates that the manufacturing sector expanded for the third straight month.

New export orders and employment expanded further, while overall stockholdings of finished goods contracted for the first time.

Here's more from CIMB:

The electronics sector PMI inched up 0.4 pt to 51.6 in Mar (-0.8 pt to 51.2 in Feb), marking the 14th month of expansion.

The tech PMI reading was in line with our and consensus estimate. Electronics production, inventory and imports continued to expand, while stockholdings of finished goods saw a return to contraction.

Input prices posted its first-time expansion for the sector, while employment recorded a moderation after expanding in the prior month.

The slower pace of improvement in Mar’s headline PMI is mainly due to slower new orders and lower levels of production, while inventories were run down following heavy restocking activity in Jan-Feb.

We expect a slower expansion of production in 2Q14, as new orders continue to rise. However, output growth may be pared by destocking activity after the surge in inventory in 1Q14.

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