China's manufacturing activity picks up in February

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China's manufacturing activity picks up in February

The official manufacturing manager's index PMI, 50.2 in February, was above the 50 point mark, which separates growth from contraction, and picked up a touch from 50.1 in January, according to data obtained from the National Bureau of Statistics NBS on Tuesday. Analysts had predicted the PMI to go down to 49.9.

China's economy rebounded strongly from a Pandemic-induced slump in 2020, though momentum started to falter in the summer of last year, as a debt crisis in the property market and strict anti-virus measures hit consumer confidence and spending.

The top legislative body will hold its annual meeting on Mar 5th, where the government will unveil economic targets for the year and likely more measures will be the focus of the policymakers this year.

Russia's invasion of Ukraine has resulted in fresh risks for the global economy, adding to months-long strains on China's factories from worldwide supply chain snags.

In February, PMI stayed above 50, confirming expectations that the economy is on track for a recovery, likely due to the pro-growth policies rolled out by the government, said Zhang Liqun, an analyst at the China Federation of Logistics Purchasing.

The demand is still weak and inflationary pressures are building, according to Zhang. China should continue to implement policies to increase domestic demand, boost government investment, and to ensure the supply of raw materials and stabilise prices. Demand improved after the Lunar New Year holidays, and new orders grew for the first time since August last year. The pharmaceutical, special equipment, and auto industries, as well as other sectors, expanded quickly last month.

The growth in production slowed, with a sub-index at 50.4, compared to 50.9 in January.

In a statement accompanying the data release, Zhao Qinghe, senior statistician at the NBS, said that new orders returned to the expansionary territory, suggesting that manufacturing market demand has been quickly released since the holiday.

Manufacturing activities have returned to normal after the Spring Festival. Inflationary pressures continued to build. The raw material price was the highest in four months.

China's factory activity returned to growth last month, boosted by expansion of new orders, according to a private PMI survey.

The property sector may provide some support this year.

The property market will rebound later in the year, as authorities loosen some of the lending restrictions on property developers and some localities relax buying requirements, bolstering buyer sentiment, according to a poll by Reuters. China's new home prices have gone up for the first time since September of this year.

In February, an index of construction activity stood at 57.6, up from 55.4 the previous month.

Some analysts say that the momentum is hostage to persistent headwinds from various sources.

The pace of economic growth went up in February, according to the latest surveys by Julian Evans-Pritchard, senior China economist at Capital Economics.

It remains weak, despite continued supply shortages, higher imported inflation and persistent disruption to services activity. China is still dealing with sporadic COVID 19 outbreaks across the country, while imported cases from Hong Kong surged. Growth picked up slightly in February, according to a survey on China's sprawling services sector on Tuesday.

In February, China's official composite PMI, which combined manufacturing and services, stood at 51.2 compared to 50.1 in January.