The private Caixin Manufacturing Purchasing Managers’ Index (PMI) for February reached 50.9, a slight increase from January’s 50.8, marking the fourth consecutive month in expansion territory. This suggests a continual improvement in the Chinese economy. The manufacturing production index, new orders index, and new export orders index showed growth within the expansion range, with the new export orders index hitting a one-year high. Entrepreneurs in the manufacturing sector expressed heightened optimism, leading to a new high in the production and operation expectations index since May 2023, according to a private survey.
This four-month streak above the expansion line is the first since the second half of 2021, indicating an overall enhancement in the economy and substantial progress in high-quality development, noted Wang Zhe, Senior Economist at Caixin Insight Group.
The Caixin PMI primarily reflects the business activity of privately-run small and medium-sized enterprises in China. In contrast, the official manufacturing PMI, released by the National Bureau of Statistics (NBS), stood at 49.1 in February, slightly lower than January’s 49.2. The slowdown in manufacturing production activities due to the Spring Festival holidays impacted these figures. However, business expectations remained stable, indicating increased confidence in market development post the holidays, as stated by Zhao Qinghe, an NBS statistician.
The manufacturing industry production expectation index for February, according to the NBS, increased to 54.2, a 0.2 percentage points rise from the previous month. Driven by seasonal demand, the official non-manufacturing PMI for February reached 51.4, a 0.7 percentage points increase from January. The service industry activity index also rose to 51.0 in February, up by 0.9 percentage points from the previous month.
The rapid expansion of the non-manufacturing PMI in February aligns with the surge in tourism and transportation data during the Spring Festival holidays. China’s tourism sector reported 474 million domestic tourist trips during the 2024 Spring Festival holidays, a 34.3 percent YoY increase, with total travel spending reaching 632.687 billion yuan ($88.89 billion), up by 47.3 percent YoY, according to the Ministry of Culture and Tourism.
The composite PMI, a weighted average of manufacturing and service PMI, maintained at 50.9 percent in February, reflecting the ongoing expansion of the overall Chinese economy. Economists suggest that the positive trend observed in February’s PMI indexes, particularly in consumer spending and business outlook, signals a strengthening of domestic demand and a more optimistic economic recovery.