BEIJINGChina's manufacturing activity increased as the fastest pace in more than a decade in February, according to an official index on Wednesday, surpassing expectations as production went up after the lifting of COVID 19 restrictions late last year.
The manufacturing purchasing managers' index PMI went up to 52.6 from 50.1 in January, above the 50-point mark that separates expansion and contraction in activity, according to the National Bureau of Statistics. The PMI was the highest reading since April 2012, surpassing analyst expectations of 50.5 and was the highest reading since April 2012.
In 2022, the world's second-largest economy had one of its worst years in nearly half a century due to strict COVID lockdowns and widespread infections. The curbs were abruptly lifted in December due to the highly transmissible Omicron spread across the country.
Global markets cheered the big surprise in the PMI with Asian stocks and the Australian dollar reversing earlier losses, the offshore yuan perking up and oil rallying, as investors took a more optimistic view on China's economic prospects.
The trend still points to a solid recovery at the beginning of 2023, said Zhou Hao, economist at Guotai Junan International, although we need to treat these numbers will caution as there may be significant seasonal and event factors.
Markets expect the annual meeting of parliament this weekend to set economic targets and elect new top economic officials.
The good PMI readings provide a positive note for the upcoming National People's Congress. Zhou said that the government is going to roll out more supportive policies to cement the economic recovery.
The official PMI came out just before an upbeat private sector index from Caixin S&P that showed activity rising for the first time in seven months.
The impact of COVID 19 receded while the impact of COVID 19 was felt by the sector, businesses accelerated their resumption of work and production, the NBS said in a separate statement.
The manufacturing sector has started to see more signs of recovery, but it has remained under pressure with factory-gate prices falling in January due to cautious domestic consumption and uncertain foreign demand.
The PMI for the official non-manufacturing purchasing managers rose to 56.3 from 54.4 in January, indicating the fastest expansion since March 2021.
On Friday, the central bank of China said the domestic economy was expected to rebound in 2023, although the external environment remains severe and complex. The composite PMI, which includes both manufacturing and non-manufacturing activity, rose to 56.4 from 52.9.