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China Official PMI Down to 50.1Pct in February

03-01 10:48 Caijing
"February's PMI continued to tread lower, indicating economic growth is set to shift from a rebounding trend to that of stabilization," said Zhang Liqun

China's manufacturing activity is expanding at a slower pace in February, an official survey shows, highlighting headwinds facing the world's second-largest economy.

The Purchasing Managers' Index (PMI), according to data released by the National Bureau of Statistics, fell to 50.1 from January's 50.4 percent, with a broad-base retreat of its sub-indexes.

Sources: CEIC, Bloomberg, ANZ
Sources: CEIC, Bloomberg, ANZ

Despite the slowdown, the index has stayed about the 50 break-even mark for five straight months. A reading above 50.0 indicates expansion while a reading below 50 indicates contraction.

"February's PMI continued to tread lower, indicating economic growth is set to shift from a rebounding trend to that of stabilization," said Zhang Liqun, an analyst at Development Research Center, a state think-tank.

New orders declined by 1.5 percentage points from the previous month, at 50.1, still above the 50.0-threshold, indicating that demands in the manufacturing industry are still growing. The production sub-index was 51.2 percent, down 0.1 percent while new export orders fell to 47.3 from January's 48.5.

Sources: CEIC, Bloomberg, ANZ
Sources: CEIC, Bloomberg, ANZ

While Chinese economic data is usually distorted by the Lunar New Year holiday, which fell in February, ANZ chief China economist Liu Ligang said in a research note:

"While the data followed an historical pattern affected by the Chinese New Year effect, the activity level remains lukewarm and the recent economic pickup could remain narrowly based led by a strong rebound of heavy industries."

"Meanwhile, a tightening bias in China's monetary policy has begun due to concerns over rising inflationary pressures and large capital inflows, as signaled by PBOC's first batch of repo operations last week since July 2012," he said.

 

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