China’s manufacturing sector continued to improve in February despite a moderation in production growth, survey data from IHS Markit showed Thursday.
The Caixin manufacturing Purchasing Managers’ Index rose slightly to 51.6 in February from 51.5 in January. A score above 50 indicates expansion in the sector.
It was also above the expected level of 51.3. The latest reading also signaled the strongest improvement in operating conditions for six months.
Manufacturing output continued to rise in February, albeit at a moderate pace that was slightly softer than seen at the start of the year.
In contrast, growth in new orders accelerated since January, although new export sales advanced at the softest extent for three months.
February data signaled another drop in manufacturing employment as a number of firms sought to reduce costs through the implementation of down-sizing measures.
On the price front, survey revealed that input prices continued to rise sharply despite the rate of inflation easing to a seven-month low. Consequently, firms raised their selling prices again in February, but at a moderate pace.
Business confidence strengthened to its highest level for nearly a year in February.
Positive expectations towards the 12-month outlook were widely supported by upcoming product releases and expectations that client demand will continue to improve over the year ahead.
Looking ahead, whether demand generated from the beginning of work in March will gain strength will be key in determining China’s economic direction for 2018, Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group, said.