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A private gauge of China’s manufacturing activity returned to expansionary territory in February, ending six months of contraction and marking a new high since June as Beijing moved to kick-start economic growth after lifting Covid-19 restrictions in December.
The China Caixin manufacturing purchasing managers index rose to 51.6 from 49.2 in January, according to data released Wednesday by Caixin Media Co. and S&P Global. The 50 mark separates an expansion of activity from a contraction.
The subindexes for output, total new orders and new export orders all jumped into expansionary territory, logging a new high in eight, 21 and eight months, respectively, according to Caixin.
Improved market supply and demand helped drive the subindex for employment above 50 for the first time in 11 months.
“But the growing number of workers were not able to fulfill all new orders, with the measure for backlogs of work climbing within expansionary territory,” said Wang Zhe, senior economist at Caixin Insight Group.
Optimism among manufacturers rose significantly in February, with the reading for their expectations of future output reaching a new high since March 2021, Caixin said.
“Currently, the foundation for economic recovery is not yet solid, and it will take time to fully restore production and social order to normal”, Wang said. “In the coming period, relevant policies should focus more on increasing household income and improving market expectations.”
Wednesday’s Caixin manufacturing PMI moved in the same direction as a competing official gauge. The official manufacturing PMI rose to 52.6 in February from 50.1 in January, according to official data released Wednesday, beating 50.5 expected by economists polled by The Wall Street Journal.
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