China’s Manufacturing Rises by 52.6% in January

China’s manufacturing activity expanded at the fastest pace in more than a decade in February, an official index showed on Wednesday.

This comes as production grew after the lifting of COVID-19 restrictions late last year.

The manufacturing purchasing managers’ index (PMI) shot up to 52.6 from 50.1 in January, according to China’s National Bureau of Statistics.

This is above the 50-point mark that separates expansion and contraction in activity.

The PMI far exceeded an analyst forecast of 50.5 and was the highest reading since April 2012.

The world’s second-largest economy recorded one of its worst years in nearly half a century in 2022 due to strict COVID lockdowns and subsequent widespread infections.

The curbs were abruptly lifted in December as the highly transmissible Omicron spread across the country.

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.

Businesses accelerated their resumption of work and production, as the effect of economic stabilisation policies was felt by the sector while the impact of COVID-19 receded, the NBS said in a separate statement.

Furniture manufacturing, metal products and electrical machinery equipment saw big improvements, with production and new orders indexes in these industries all above 60.0.

Highest Export Orders since 2021

New export orders rose for the first time since April 2021, the PMI showed.

More broadly, the outlook remains mixed as the country’s major trading partners deal with surging interest rates and cost pressures.

China’s manufacturing sector had been under pressure this year with factory-gate prices falling in January, data last month showed, as a result of still cautious domestic consumption and uncertain foreign demand.

Manufacturing companies have also seen surging purchasing prices in steel and related downstream industries, the NBS said.

The official non-manufacturing purchasing managers’ index (PMI) rose to 56.3 from 54.4 in January, indicating the fastest pace of expansion since March 2021.

Construction activity, which is part of the official non-manufacturing PMI, picked up further, standing at 60.2 from 56.4, partly due to the resulting boost to infrastructure spending and increasing financing to help developers complete stalled projects.

Services activity also continued to rise with improvements in the transportation and accommodation sectors.

On Friday, China’s central bank said the domestic economy was expected to generally rebound in 2023, although the external environment remained “severe and complex.”

The composite PMI, which includes both manufacturing and non-manufacturing activity, rose to 56.4 from 52.9.

Reuters/Hauwa Abu