The Manufacturing Purchasing Managers’ Index hits its highest since 2012 after the lifting of COVID sidewalks in Beijing.
Manufacturing activity in China grew at its fastest pace in more than a decade in February, an official index showed, beating expectations as production grew following the lifting of COVID-19 restrictions late last year.
The Purchasing Managers’ Index (PMI) for the manufacturing industry soared from 50.1 in January to 52.6, according to figures from the National Bureau of Statistics released Wednesday, above the 50-point mark that indicates expansion and contraction in activity. separates. The PMI broadly beat an analyst forecast of 50.5, marking its highest reading since April 2012.
China, the world’s second-largest economy, experienced one of its worst years in nearly half a century in 2022 due to strict COVID lockdowns and subsequent widespread infections. Beijing abruptly lifted curbs in December as the highly transmissible Omicron variant spread across the country.
Global markets welcomed the big surprise in the PMI, with Asian stocks and the Australian dollar recovering from earlier losses, the offshore yuan rallied and oil rebounding, while investors became more optimistic about China’s economic outlook.
“While we should treat these numbers with caution as there could be significant seasonal and event factors, the overall trend still points to a solid recovery in early 2023,” said Zhou Hao, an economist at Guotai Junan International.
Markets expect the annual meeting of China’s parliament, which kicks off this weekend, to set economic goals and elect new top economic officials.
“The decent PMI readings are a positive note for the upcoming National People’s Congress. We expect the government to roll out further supportive policies to strengthen the economic recovery,” said Zhou.
The official PMI came in just ahead of an upbeat private sector index from Caixin/S&P, which showed an increase in activity for the first time in seven months.
Businesses accelerated their return to work and production as the effect of economic stabilization policies were felt by the industry, while the impact of COVID-19 eased, the NBS said in a separate statement.
While the manufacturing industry is starting to show more signs of recovery, it remained under pressure as factory prices fell in January on the back of still-prudent domestic consumption and uncertain foreign demand.
The official PMI for non-manufacturing companies rose to 56.3 from 54.4 in January, indicating the fastest rate of growth since March 2021.
On Friday, China’s central bank said the domestic economy is expected to generally recover in 2023, though the external environment remains “serious and complex”.
The composite PMI, which includes both manufacturing and non-manufacturing activities, rose from 52.9 to 56.4.