Factory activity in China continues to grow and marks the highest level in nearly 11 years

  • China’s official manufacturing PMI came in at 52.6 in February, above the 50-point mark that separates growth from contraction.
  • Derek Scissors, China Beige Book’s chief economist, expects consumption to improve later this year.

A worker processes high-quality yarn at a new materials workshop in Zaozhuang, east China’s Shandong province, 27 February 2023.

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According to data from the National Bureau of Statistics, China’s manufacturing activity bounced further into the expansion zone in February.

The official manufacturing purchasing managers index rose to 52.6 in February – above the 50-point mark that separates growth from contraction. That’s the highest reading since April 2012, when it reached 53.5.

February’s PMI reading is also higher than the 50.1 reported for January and above expectations of 50.5, according to economists polled by Reuters.

The non-manufacturing PMI also increased further to 56.3 from the print of 54.4 in January, when it saw a sharp improvement, supported by a recovery in services and construction activity.

The Chinese onshore yuan stood at 6.9325 against the US dollar, while the offshore yuan rose 0.15% to 6.9480 against the dollar.

China Beige Book chief economist Derek Scissors told CNBC’s “Squawk Box Asia” he expects to see an improvement in consumption later this year, bolstered by eventual announcements from upcoming National People’s Congress meetings.

“I think April is really the time when consumers will pick up on the cues from the National People’s Congress meetings in March and the announcements made there,” Scissors said.

He added: “In April we should see where Chinese consumption goes. It will be better than last year, but it won’t be much better and the people who rely on that may be disappointed.”

The Chinese National Party Congress begins on Sunday.


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