China's Feb Caixin PMI: Growth picks up

China Caixin Manufacturing PMI for February came at 51.7 vs 50.8 last, with new business increasing at a faster pace amid solid upturn in new export sales, while employment declined at softest rate in two years. Addiionally, input cost inflation eased to four-month low.

Summary

Chinese manufacturing companies saw a stronger improvement in overall business conditions in February, with output and total new orders both rising at faster rates than at the start of the year.

The latest upturn in new work was supported by the fastest increase in new export business since September 2014. At the same time, employment declined at only a marginal pace that was the slowest seen in two years.

Despite easing since January, the rate of input price inflation remained sharp which prompted firms to raise their prices charged. Looking ahead, manufacturers signalled the strongest degree of optimism towards future output growth since May 2015.

Commenting on the China General Manufacturing PMI™ data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said: “The Caixin China General Manufacturing PMI was 51.7 in February, up 0.7 points from the previous month and the jointsecond highest in four years. The output and new orders subindices rebounded from a month ago."

Dr. Zhengsheng Zhong added: "Stocks of purchases returned to expansion, but stocks of finished goods continued to decline. It remains to be seen whether the restocking by manufacturers can be sustained. Input and output prices continued to rise rapidly, but at slower rates compared with the previous month. The Chinese manufacturing economy continued to recover in February. But it is premature to jump to the conclusion that the recovery is entrenched. The second quarter is likely a key period to look at forfuture trends.”