China’s factory activity has contracted for the second consecutive month in February, according to the National Bureau of Statistics. The official manufacturing purchasing managers index (PMI) fell to 49, a four-month low, down from 49.3 in January. A PMI reading below 50 indicates contraction in manufacturing activity. This decline follows a brief expansion in December, which broke an eight-month streak of contraction. The renewed downturn highlights ongoing weakness in the manufacturing sector, potentially exacerbated by sluggish domestic consumption and demand.
Huo Lihui, a chief statistician at the National Bureau of Statistics, attributed the weaker data to seasonal factors, including the Lunar New Year holiday, which spanned nine days in mid-February. However, a separate private sector PMI survey conducted by RatingDog, a Chinese credit research and analysis company, presented a more optimistic outlook.
The RatingDog survey reported a February PMI reading of 52.1, an increase from 50.3 in January. This indicates expansion in the private sector and marks the most significant expansion since December 2020. The private survey is believed to better reflect trends among smaller, export-oriented private companies. Yao Yu, founder of RatingDog, noted that overseas demand rebounded strongly in February, with new export orders experiencing notable growth.
These conflicting reports paint a mixed picture of China’s manufacturing sector. While the official PMI suggests continued contraction influenced by seasonal factors, the private survey indicates a rebound driven by strong export demand. The impact of potentially lower US tariffs in the coming weeks remains to be seen, but could provide a further boost to Chinese manufacturing. RatingDog is a Chinese credit research and analysis company providing insights into financial markets. The National Bureau of Statistics is responsible for collecting and publishing various economic data for China.
