China’s manufacturing activity grew at the fastest pace in more than five years in February and the services sector grew the most in almost three years, survey results from S&P Global revealed Wednesday.
The headline RatingDog manufacturing Purchasing Managers’ Index rose to 52.1 from 50.3 in January. This was the highest score since December 2020.
“Overall, February’s data show a strong expansion driven by robust supply and demand, with a notable external demand rebound,” RatingDog Founder Yao Yu said.
“The manufacturing PMI is expected to maintain a moderate expansionary trend in the short term,” Yu said.
New orders grew at a faster pace in February with particular strength in exports. Output and purchasing was stepped up, and manufacturers grew more confident about the 12-month outlook.
Backlogs of work increased but finished goods inventories stabilized as firms ramped up production.
On the price front, the survey showed that input price inflation accelerated to the highest since June 2022 and output price inflation hit a 15-month high.
Further, manufacturers were more optimistic about future output expectations with sentiment rising to the highest in eleven months.
The services sector expanded at the fastest pace in 33 months in February, the survey showed. The headline services PMI advanced to 56.7 from 52.3 in January.
Stronger new business inflows, including from foreign markets led to the sharper rise in services activity.
Business sentiment among service providers improved in February. However, companies opted to lower their staffing levels amid a lack of capacity pressure and rising cost burdens.
Average input prices rose at a quicker rate in February, which in turn drove a renewed hike in output charges.
The composite output index continued to remain above the 50.0 no-change threshold. At 55.4 in February, the index rose from 51.6 in January. Moreover, the rate of expansion was the quickest since May 2023 due to faster increases in output across the manufacturing and service sectors.
Elsewhere, the official purchasing managers’ survey from the National Bureau of Statistics showed that the manufacturing PMI fell more-than-expected to 49.0 from 49.3 in January. The score was forecast to fall to 49.2. The non-manufacturing PMI rose slightly to 49.5 from 49.4 in the previous month but remained below the neutral level.
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