Data PMI Continued To Expand For 12 Consecutive Months

According to the data of the National Bureau of statistics, China's Manufacturing Purchasing Manager index, non manufacturing business activity index and comprehensive PMI output index in February were 50.6%, 51.4% and 51.6%, respectively, down 0.7%, 1.0 and 1.2 percentage points compared with the previous month, and remained above the prosperity and drought line for 12 consecutive months, and China's economy continued to expand in general.

In this regard, Zhao Qinghe, Senior Statistician of the service industry survey center of the National Bureau of statistics, said that the Spring Festival holiday and sunset this year were in the middle of February. The holiday factors had a great impact on the production and operation of enterprises in that month. The market activity of the manufacturing industry declined, and the prosperity level fell down compared with the previous month.

"Business operation is expected to improve generally in February. The downward trend of PMI index in recent two months is short-term fluctuation, which will not affect the overall situation of economic recovery." Wang Qing, chief Macro Analyst of Dongfang Jincheng, told the financial times that the production and operation activities of the manufacturing industry were expected to rise by 1.3 percentage points in February, reaching a high level of 59.2%; the expected index of non manufacturing business activities increased by 8.9 percentage points to 64%. PMI indices are expected to rebound in March.

The decline of manufacturing PMI caused by Spring Festival

Since 2021, PMI has declined in January and February, but it is still in the boom range. In this regard, Wang Qing said that the decline in market demand during the Spring Festival caused by the "local Spring Festival" is the direct reason for the decline of PMI index of manufacturing and non manufacturing industries.

Zhang Liqun, a special analyst at China Logistics Information Center, also expressed a similar view. He said that based on the characteristics of the PMI index, the Spring Festival factors over the years have an obvious impact on the short-term trend of the index. The trend of PMI index in February is largely affected by the Spring Festival holiday. In PMI index, the expected index of future production and operation is improved, which indicates that enterprises are more optimistic about the future market expectation, indicating that the production recovery momentum is better after the Spring Festival.

Talking about the characteristics of manufacturing PMI in February, Zhao Qinghe said that the production index and new order index in February were 51.9% and 51.5%, respectively, 1.6% and 0.8% lower than that of the previous month. The expansion of both sides of the manufacturing industry's production and demand has weakened, but it continues to remain in the expansion range. The new export order index and import index showed that the import and export situation declined. In addition, the PMI of large enterprises in February was 52.2%, a slight increase of 0.1% over the previous month, and the prosperity level of large enterprises remained stable.

It is worth noting that the price index continues to run high. Wang Jingwen, a senior researcher at Pangu think tank, told the financial times that since February, international commodity prices have continued to rise, driving the main raw material purchase price index to 66.7% in February, which has been higher than 60.0% for four consecutive months. The rise in the purchase price of raw materials helped to increase the price of push out factories. The ex factory price index of the current month was 1.3 percentage points higher than that of the previous month, which was 58.5%, which was a high level in the near future. In addition, the shortage of supply during the Spring Festival also led to the price rise.

In response, Wen Tao, a researcher at China Logistics Information Center, said that according to the survey, the proportion of enterprises with high raw material costs accounted for 53.6%, the highest since 2018. It is suggested to further stabilize and optimize the supply chain of the industrial chain and stabilize the market price of raw materials.

Non manufacturing business activity index falls

In February, the non manufacturing business activity index was 51.4%, lower than 1.0% of the previous month, indicating that the pace of non manufacturing industry expansion has slowed down.

Cai Jin, vice president of China Federation of logistics and purchasing, said that in February, affected by the Spring Festival holiday, the construction industry and the producer services industry, which mainly engaged in wholesale of bulk commodities, fell, driving the growth of non manufacturing industry to slow down. The business activity index decreased from last month, but remained stable at 51.4%. In the same month, the activities of retail, catering, transportation and scenic service industries picked up, which played a stable role in the growth of non manufacturing industry.

Zhao Qinghe said that the business activity index of the service industry in February was 50.8%, lower than 0.3 percentage point of the previous month, and still higher than the critical point, indicating that the service industry continued to expand, but the range was narrowed. From the perspective of industry situation, the business activity index of retail, catering, entertainment and other industries closely related to residents' consumption is in the expansion range and higher than that of last month, and the business activities of the industry are relatively active; the business activity index of telecommunication, radio and television satellite transmission service, monetary and financial service industry is higher than 58.0%, and the business volume maintains rapid growth. At the same time, the business activity index of accommodation, capital market services, leasing and business services was below the critical point. The expected index of business activities in the service industry was 63.2%, 7.9 percentage points higher than that of the previous month. Enterprises are more optimistic about the development prospects of the service industry market in the near future. However, affected by the Spring Festival holidays and weather factors, the construction progress of the construction industry slowed down. The business activity index of the construction industry in the month was 54.7%, lower than 5.3% of the previous month.

The momentum of economic stability and recovery continued to consolidate

Although there was a downward trend of PMI in February, it has been above the rongkuo line for 12 consecutive months. Experts generally believe that the short-term small decline of PMI will not affect the recovery momentum of economic stability.

In Wentao's view, many positive factors are prominent in the current economic operation. On the one hand, the new momentum continued to grow rapidly, and the pace of high-end manufacturing industry accelerated. In February, PMI of equipment manufacturing industry was 52.2%, production index and new order index were both above 53.5%; although PMI of high-tech manufacturing industry decreased by more than 1 percentage point from last month, it still maintained at 53.6%, with rapid growth of the industry. On the other hand, under the influence of the Spring Festival, the PMI of large enterprises is still picking up, which has a stronger supporting effect on the economy. In February, the PMI of large enterprises increased by 0.1 percentage point to 52.2%, 1.6 percentage points higher than that of the overall manufacturing industry, and the difference reached a new high since 2020.

What needs to be seen is that enterprises are still optimistic about future market expectations. Zhao Qinghe said that the business is expected to be better. In February, the expected index of enterprise production and operation activities rose to 59.2%, 1.3 percentage points higher than the previous month. From the perspective of industry situation, the expected production and operation indexes of general equipment, special equipment, automobile, computer communication electronic equipment and instruments are all in the high prosperity range. Some of the surveyed enterprises reported that March will enter the peak season of production and marketing, and the market demand is expected to pick up, and the enterprises' confidence in the development of the industry after the festival will be enhanced.

"The stable recovery of non manufacturing industry in March is worth looking forward to." Wu Wei, a researcher at China Logistics Information Center, said that the continuous and effective prevention and control of the current epidemic situation has provided a stable social environment for the economic recovery. At the same time, the production and operation of enterprises has returned to normal, and the activities related to accommodation, entertainment and other service industries as well as infrastructure investment are expected to continue to accelerate.

"Generally speaking, the off-season correction in February has not changed the long-term stable recovery trend of non manufacturing industries. On the premise of maintaining the sustained stability of policies, macro-control should strengthen the cultivation of endogenous driving force of economic growth through expanding domestic demand and innovation driven strategies." Wu Wei said.