Will China see a strong manufacturing activity rebound after contracting for 5 months?
- China’s official gauge of manufacturing activity fell in February, in part thanks to the Lunar New Year holiday season
- Figures come in advance of gross domestic product growth target, to be announced at annual session of China’s top legislature next week
China’s manufacturing activity declined for the fifth consecutive month in February, with the fall attributed to disruptions surrounding the Lunar New Year holiday, but analysts anticipate a moderate pickup in the months ahead despite structural frailties still looming large.
The new-orders subindex remained unchanged at 49, while the new export orders subindex stood at 46.3, compared to 47.2 in January.
The readings, though, are expected to see an improvement in the near term thanks to policy support, although “this rebound appears fragile and may not last once policy support is scaled back,” with the recovery set to be short lived due to structural issues, said analysts at Capital Economics.
We need to wait for more macro data on retail sales and industrial production in January and February to get a clear view of the economy
Elsewhere, the non-manufacturing PMI, which measures business sentiment in the services and construction sectors, climbed to 51.4 from 50.7 in January, thanks to booming travel and dining activities during the Lunar New Year.