China’s factory activity hits decade high

Activity in China’s manufacturing sector accelerated at its fastest pace in more than a decade in February due to a production rebound from Covid restrictions, the National Bureau of Statistics reported on Wednesday. 

The official purchasing managers index (PMI), which measures factory activity, jumped to 52.6 from 50.1 in January, far exceeding analyst expectations of 50.5. The 50 threshold separates growth from contraction.

The country’s non-manufacturing PMI, which reflects sentiment in the services and construction sectors, also finished higher than expected, rising to 56.3 from 54.4 in January.

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

Although there were “significant seasonal and event factors” influencing the PMI figures, the “overall trend still points to a solid recovery at the beginning of 2023,” Zhou Hao, the chief economist at Guotai Junan International, told Bloomberg. “The decent PMI readings provide a positive note for the upcoming National People’s Congress,” with the government expected to roll out further supportive policies, he noted.

China’s vast manufacturing industry has been recovering and steadily returning to levels seen before the pandemic.

Last week, the country’s central bank said the economy was expected to generally rebound in 2023, although the external environment remained “severe and complex.” The regulator pledged to provide “sustainable” support for the real economy and refrain from using “flood-style” stimulus.

Chinese Premier Li Keqiang has also indicated that the nation’s economy is rebounding, but warned it is still facing risks and challenges.

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