China’s official PMI (as opposed to the HSBC Flash version) increased in February. The headline PMI rose from 50.5 to 51.0, better than the expected 50.7.
Most individual components increased in February. New Orders increased from 50.4 to 51.0, imports increased from 46.9 to 50.8 and new exports orders increased from 48.9 to 51.1 while employment increased from 47.1 to 49.5.
Despite a seemingly across-the-board expansion, the New Orders Less Inventory measure fell from 2.4 to 0.5. Meanwhile, input price increased from 50 to 54, which seems to suggest that some inflationary pressure persist. Also note that this year’s Chinese New Year fell on 23 January. If the rise in PMI for February has anything to do with the usual post-Chinese New Year rebound, the current improvement in activities is an underwhelming one. Not to mention that the February reading for the year is the second worst since record began.
On another note, the HSBC China manufacturing PMI rose from 48.8 to 49.6. While improving, it is still within the contraction territory, suggesting that smaller companies are faring less well than bigger companies.
