Beijing, March 1 (BNA): Factory activity in China returned to growth in February, buoyed by expanding new orders, a special survey showed Tuesday, although employment remains mired in deflation and inflationary pressures intensify.
The Caixin/Market Manufacturing Purchasing Managers’ Index (PMI) rose to 50.4 in February, moving away from a two-year low of 49.1 the previous month. Economists polled by Reuters had expected the index to rise to 49.3, Reuters reported.
The 50 mark separates growth from contraction on a monthly basis.
The improved reading was in line with the official PMI released earlier in the day, which showed the index at 50.2 last month, up slightly from 50.1 in January.
The sub-index for new orders came to 51.5, the highest level since June 2021 and a significant increase from 48.5 the previous month, as factories reported increased customer demand.
Factory production also expanded to meet new demand, albeit by a smaller margin at 50.1 from 48.4 in the previous month. The survey showed that the rise was driven by manufacturers of consumer goods, as production fell for producers of intermediate and investment goods.
China’s economy started last year on strong foundations, recovering from the recession caused by the epidemic in 2020. However, momentum began to emerge in the summer, weighed down by debt problems in the property market and strict anti-virus measures that hurt consumer confidence and spending.
Policymakers have pledged to stabilize growth this year and all eyes are on the annual meeting of its top legislature, which begins on March 5, during which the government will unveil economic targets for this year and potentially further stimulus measures.
Despite some improvements in the latest Caixin PMI, factories continued to cut staff numbers for the seventh consecutive month, highlighting the long-standing challenges facing the manufacturing sector from supply chain issues, sporadic COVID-19 outbreaks and weak consumer demand.
“From January to February, many regions across China, including Jiangsu Province, Guangxi Zhuang Autonomous Region and Inner Mongolia, suffered from the outbreak of COVID-19. Epidemic control measures were strengthened, which restricted the transportation and sales of manufactured goods,” he said. ” Wang Zhe, chief economist at Caixin Insight Group, said in a statement accompanying the data release.
“Policy makers should strengthen support policies to encourage employment, strengthen structural support for small and medium-sized enterprises, and effectively reduce tax burdens and fundraising costs for businesses.”
Inflationary pressures rose, with input prices rising at the fastest rate in four months. Factories will be able to pass on some costs to customers, as production prices rose for the second month in a row.
Manufacturers’ confidence toward the next year rose to an eight-month high.
MI