China's Purchasing Managers' Index (PMI) for February was released, showing a slight decline in the manufacturing sector while the non-manufacturing sector recorded a modest uptick. The manufacturing PMI stood at 49.0%, down 0.3 percentage points from the previous month, reflecting a contraction in activity levels. The non-manufacturing Business Activity Index reached 49.5%, rising by 0.1 percentage points. The composite PMI output index registered 49.5%, declining by 0.3 percentage points from January, indicating an overall slowdown in business activity across Chinese enterprises.
In the manufacturing sector, the dip in the PMI was partly attributed to the extended Spring Festival holiday, which fell entirely in the latter half of February. This led to reduced production and market demand. Both the production index and new orders index dropped to 49.6% and 48.6%, respectively, down by 1.0 and 0.6 percentage points from the previous month. However, certain industries, including agricultural and food processing, as well as computer and electronic equipment manufacturing, maintained expansionary levels in both production and new orders. In contrast, sectors such as textiles, apparel, and automobiles continued to operate below the threshold, indicating weaker market activity.
Large enterprises demonstrated resilience, with their PMI rising to 51.5%, up 1.2 percentage points from January. Meanwhile, medium and small enterprises were more significantly impacted by the holiday, with PMI readings of 47.5% and 44.8%, respectively, reflecting declines of 1.2 and 2.6 percentage points. High-tech manufacturing remained a bright spot, with a PMI of 51.5%, staying in expansionary territory and outperforming the overall manufacturing average. The consumer goods industry also saw improvement, with its PMI rising to 48.8%. In contrast, equipment manufacturing and high-energy-consuming industries experienced declines.
Business expectations in the manufacturing sector improved, with the production and operation outlook index climbing to 53.2%, up 0.6 percentage points from January. Industries such as general equipment manufacturing and railway, ship, and aerospace equipment reported particularly optimistic outlooks.
In the non-manufacturing sector, the services industry saw a rebound, with its Business Activity Index reaching 49.7%, up 0.2 percentage points. Holiday-related sectors such as accommodation, catering, and cultural and sports entertainment recorded strong growth, with activity indices above 60.0%. Retail and air transport also showed improvement. However, capital market services and real estate remained subdued. The non-manufacturing business expectation index stood at 55.8%, reflecting sustained optimism among services firms.
Construction activity declined due to the holiday, with its Business Activity Index falling to 48.2%, down 0.6 percentage points. Despite this, the sector's outlook index rose to 50.9%, returning to expansionary territory and signaling renewed confidence among construction firms.
The composite PMI output index, which combines manufacturing production and non-manufacturing business activity, settled at 49.5%, down 0.3 percentage points from the previous month, indicating a broad-based moderation in business operations.