China’s manufacturing activity storms ahead with fastest growth in a decade post Covid-19 lull

Beijing:  Manufacturing activity in China expanded last month at the fastest pace in more than a decade, an official index revealed on Wednesday. The country’s factory output stormed ahead as production increased across sectors after stringent Covid-19 curbs were lifted in December last year.

China’s manufacturing purchasing managers’ index (PMI) rose to 52.6 from 50.1 in January, according to (China’s) National Bureau of Statistics, well above the 50-point mark that separates expansion and contraction in activity. The PMI recorded, was the highest monthly reading since April 2012.

PMIs are a measure of economic trends which provide businesses, central banks, governments and investors important information about current and future business conditions.

China—which is the world’s second-largest economy recorded one of its worst years in nearly half a century in 2022 due to strict Covid-19 induced lockdowns and subsequent widespread infections in most Chinese provinces. The curbs were abruptly lifted in December as the highly transmissible Omicron variant spread like wildfire across the country.

“The high PMI readings partly reflect the economy’s weak starting point coming into this year and are likely to drop back before long as the pace of the recovery slows,” said Julian Evans-Pritchard, head of China economics at Capital Economics.

“We had already been expecting a rapid near-term rebound, but the latest data suggest that even our above-consensus forecasts for growth of 5.5% this year may prove too conservative,” he said.

China’s manufacturing sector had been under pressure this year with factory-gate prices falling in January, data last month showed, due to still cautious domestic consumption and uncertain foreign demand.

Manufacturing companies have also seen surging purchasing prices in steel and related downstream industries.

“The decent PMI readings provide a positive note for the upcoming National People’s Congress. We expect the government to roll out further supportive policies to cement the economic recovery,” said Zhou Hao, economist at Guotai Junan International.

Chinese businesses increased their resumption of work and production, as the effect of economic stabilisation policies was felt by most sectors while the impact of Covid-19 receded, the NBS said in a separate statement.

Furniture manufacturing, metal products and electrical machinery equipment saw big improvements, with production and new orders indexes in these industries all above 60.0.

Construction activity, which is part of the official non-manufacturing PMI, also picked up, standing at 60.2 from 56.4, partly due to the resulting boost to infrastructure spending and increasing financing to help developers complete stalled projects.

Services activity also continued to rise with improvements in the transportation and accommodation sectors.

Read all the Latest News, Trending News, Cricket News, Bollywood News,
India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.