China’s factory activity slump deepens in February
BEIJING, China — China’s factory activity slowed in February, official data showed on Wednesday, missing forecasts and extending a slump just ahead of closely watched announcements on policy planning.
The world’s second-largest economy has battled a slowdown in domestic demand and investment in recent years that have weighed on its vast manufacturing sector.
A key measure of industrial health, the manufacturing purchasing managers’ index fell to 49.0 in February, according to the National Bureau of Statistics (NBS), below the 50-point mark that divides expansions and contractions.
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That figure was down from 49.3 in January, also missing a forecast of 49.2 in a Bloomberg survey of economists.
NBS statistician Huo Lihui attributed the slide mainly to slower operations during the Spring Festival holiday, which fell entirely in February this year.
However, indices for sectors including “textiles, apparel and automobiles remained below the critical point, indicating weak market activity”, Huo said.
Non-manufacturing PMI
China’s non-manufacturing PMI — a gauge of activity across services and construction — was 49.5 in February, a slight improvement from January’s slump.
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The lackluster data was announced a day before Chinese leaders are set to unveil their new Five-Year Plan at an annual political conclave in Beijing known as the Two Sessions.
The announcements expected on Thursday will include this year’s annual growth target and defence budget.
“Economic activities contracted in the beginning of this year,” Zhiwei Zhang, President and Chief Economist at Pinpoint Asset Management, wrote in a note after Wednesday’s data.
“The government’s policy stance is flexible this year,” said Zhang, adding that he “(expects) the government to boost investment moderately to mitigate the pressure on the economy” if activity slows further in the months ahead.
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