China’s official PMI shrinks again in February as economy still weak
Print Edition
CHINA’S manufacturing sector contracted for the second straight month in February, a survey showed yesterday.
Combined with a flat service sector, the data suggested a stabilizing but still weak economy that required monetary stimulus such as an interest rate cut announced on Saturday, analysts said.
The official Purchasing Managers’ Index, a gauge of the operating conditions in the manufacturing sector for state-owned enterprises, ended at 49.9 last month, edging up from 49.8 in January, according to a joint report by the National Bureau of Statistics and the China Federation of Logistics and Purchasing.
The reading was again below the demarcation line of 50 which separates expansion from contraction. The PMI pointed to contracted industrial activities for the first time in over two years in January.
Zhao Qinghe, a researcher at the bureau, said the official PMI finally ended a four-month downward trend, reflecting a stabilizing economy.
“China’s recent efforts to bolster market liquidity and more investment in infrastructure construction have helped strengthen people’s confidence,” Zhao said.
“Meanwhile, stabilizing prices of commodities on the global market also contributed to reversing the downturn.”
The components showed production shrank to 51.4 last month, 0.3 percentage points below that in January due to fewer working days last month. But new orders gained 0.2 percentage points to 50.4, and inventory rose 0.9 percentage points to 48.2.
Meanwhile, the official non-manufacturing PMI, a counterpart for the service sector, rose to 53.9 in February from 53.7 a month earlier, showing a moderate growth in the sector.
But the data came in as worrisome to Liu Ligang, an economist at Australia & New Zealand Banking Group Ltd.
“Indeed, there emerged more alarming signals of the economy, especially in the manufacturing sector,” Liu said. “The official PMI reinforced that the headwinds remain in the economy.”
On Saturday, the People’s Bank of China decided to trim both one-year deposit and lending rates by 0.25 percentage points. It was the second interest rate cut in three months.
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