Caixin Feb China manufacturing PMI swings to expansion at 51.6

SINGAPORE (ICIS)–China’s manufacturing purchasing managers’ index (PMI) rose to 51.6 in February from 49.2 in January, signalling the first expansionary reading since July 2022, the Chinese media firm said on Wednesday.

A PMI reading above 50 indicates expansion in the manufacturing economy, while a lower number denotes contraction.

The higher headline index reading was supported by a renewed increase in production volumes in February, with the rate of expansion the steepest since June 2022, Caixin said in a statement.

Higher sales were linked to the recent roll back of pandemic restrictions and subsequent improvement in demand conditions, it said.

“Companies also noted an improvement in foreign demand for Chinese manufactured goods, with new export orders rising for the first time since July 2022,” Caixin said.

The removal of COVID-19 restrictions also had a positive impact on supply chains in February, with average delivery times for inputs improving for the first time since last June, and to the greatest extent in eight years.

However, the impact of the pandemic remains far-reaching despite China entering a post-COVID recovery period, said Wang Zhe, a senior economist at Caixin Insight Group.

“Currently, the foundation for economic recovery is not yet solid, and it will take time to fully restore production and social order to normal,” Wang said.

“The central government said restoring and expanding consumption should be prioritized… In the coming period, relevant policies should focus more on increasing household income and improving market expectations,” Wang added.