Fresh snapshots of China’s manufacturing and non-manufacturing sectors showed a more positive outlook for the economy despite a seasonal dip in factory activity.
Official data released yesterday showed the country’s Purchasing Managers’ Index, which measures vitality in the manufacturing sector, edged down 0.3 points to 49.2 in February from a month earlier. A reading above 50 indicates expansion, while under 50 is considered contraction on a monthly basis.
The month-on-month fall was due largely to the halt in production and output reduction during the Spring Festival, said Zhao Qinghe, senior statistician of the National Bureau of Statistics.
The sub-index for production fell 1.4 points from January to 49.5, while new orders advanced 1 point to 50.6 in February, indicating a rebound in market demand, the bureau said.
Zhao also noted the strength of new sources of growth, as the sub-index for production of the high-tech manufacturing sector continued to rise.
Commenting on the February manufacturing PMI data, investment banking firm CICC said China’s domestic demand is showing signs of recovery.
“Deflationary pressure receded in February, and production and business expectations rebounded visibly,” CICC said.
Yesterday’s data showed a four-month high reading of 56.2 for the production and operation expectations index, a marked rise of 3.7 points from January.
“Manufacturing PMI may rebound in the near term if the moderately reflationary credit cycle sustains,” CICC said.
The decline in new export orders — the sub-index fell to 45.2 from 46.9 — together with the overall rise in new orders means new domestic orders rose at a faster pace, said Lu Ting, chief China economist of Nomura.
Separately, the non-manufacturing PMI showed the country’s non-manufacturing sector remained within the expansion range last month, the statistics bureau said.
The non-manufacturing PMI fell 0.4 points to 54.3 in February from a month earlier, mainly dragged by the construction sector. The sub-index for the construction sector dropped to 59.2 from 60.9, due to the Spring Festival holiday and bad weather, but the sector is likely to pick up the pace in the future as data showed rising business expectations.
Market sentiment is improving as sub-indexes for new orders and business expectation picked up by 0.3 and 1.8 points respectively from January, indicating growing service demands, the bureau said.
Indexes for sectors including railway and air transport, telecom, banking and leasing stood above 55, indicating robust business growth.
The overall PMI output index — the combined manufacturing and non-manufacturing PMIs — edged down 0.8 points to 52.4, indicating that the production and business activities of Chinese enterprises continued to expand but at a slower pace compared with the previous month due to the Spring Festival.