Data released on March 4 by the National Bureau of Statistics (NBS) Service Industry Survey Center and the China Federation of Logistics & Purchasing (CFLP) showed that in February, affected by factors such as the Spring Festival holiday, the Manufacturing Purchasing Managers' Index (PMI) was 49.0%, a decrease of 0.3 percentage points from January. The Non-Manufacturing Business Activity Index was 49.5%, up 0.1 percentage points from the previous month. The Composite PMI Output Index stood at 49.5%, down 0.3 percentage points from January.
A chief statistician from the NBS Service Industry Survey Center interpreted the data, stating that historically, the PMI for the month containing the Spring Festival often shows some volatility. This year, with the extended holiday falling entirely in mid-to-late February, corporate production and operations were impacted, leading to an overall decrease in manufacturing market activity.
An analyst with the CFLP suggested that the economy is currently in a critical period of building momentum for recovery. It is essential to significantly increase government investment in public goods, substantially expand demand, boost corporate orders, and fully leverage the effectiveness of government macroeconomic governance through sufficiently strong counter-cyclical and cross-cyclical macroeconomic policy adjustments. This approach aims to vigorously enhance corporate confidence and strive for a favorable start to the 15th Five-Year Plan period.
High-tech manufacturing continued to expand. The data indicated that the February Manufacturing PMI was 49.0%, reflecting a lower level of prosperity compared to January.
Specifically, the Production Index and the New Orders Index were 49.6% and 48.6% respectively, down by 1.0 and 0.6 percentage points from January, indicating a decline in manufacturing production and market demand. By sector, the production and new orders indices for industries like agricultural and food processing, and computers, communication, and other electronic equipment remained above the 50-point mark, indicating expanding production and demand. Conversely, indices for sectors such as textiles, apparel, and automobiles remained below 50, suggesting weaker market activity.
An analyst from the China Logistics Information Center commented that the decline in the New Orders Index in February indicates an overall tightening of manufacturing market demand, primarily due to the continued effects of seasonal factors. Firstly, the Spring Festival holiday in mid-to-late February significantly affected order reception and production scheduling for manufacturing enterprises, particularly in upstream and midstream industries. Secondly, the impact of low temperatures in many parts of the country on outdoor construction work persisted, leading to a corresponding contraction in demand for related equipment, facilities, and raw materials.
By enterprise size, the PMI for large enterprises was 51.5%, up 1.2 percentage points from January and above the 50-point threshold. The PMI for medium and small enterprises was 47.5% and 44.8% respectively, down 1.2 and 2.6 percentage points from the previous month, both below the 50-point mark.
Notably, growth momentum in high-tech manufacturing remained evident. The High-Tech Manufacturing PMI was 51.5%, staying in expansionary territory and significantly higher than the overall manufacturing level, indicating favorable development trends in related industries. The Consumer Goods Industry PMI was 48.8%, up 0.5 percentage points from January, showing a recovery in prosperity. The PMI for the Equipment Manufacturing and High-Energy-Consumption Industries were 49.8% and 47.8% respectively, down 0.3 and 0.1 percentage points from January, indicating a slight decline in their prosperity levels.
The analyst noted that seasonal factors continued to affect manufacturing in February, leading to a slowdown in operations. However, this slowdown is considered temporary, with positive changes still accumulating. With the impact of the Spring Festival holiday largely subsiding in March, temperatures rising across regions, and factories and construction sites fully resuming work, economic and social activities are expected to return to normal. Many provinces and municipalities have set development targets. Supported by the continued implementation of policies aimed at stabilizing the economy, expanding domestic demand, and stabilizing foreign trade, alongside steady progress in reforms and development initiatives by local governments, manufacturing is anticipated to stabilize and recover in March. Market demand is expected to grow steadily in volume and improve in quality. Production activities are projected to rebound well, with accelerated growth momentum in new sectors. Large enterprises are expected to maintain steady expansion, while small and medium-sized enterprises are likely to stabilize relatively quickly. Manufacturing companies are also becoming more optimistic about future market prospects, with the Production and Business Activity Expectation Index rising to 53.2%, up 0.6 percentage points from January.
The service sector saw an improvement in its prosperity level. Data showed the Non-Manufacturing Business Activity Index was 49.5% in February, a slight increase of 0.1 percentage points from January, indicating some improvement in the overall prosperity level of the non-manufacturing sector.
Within this, the service industry's景气水平rebounded. The Services Business Activity Index was 49.7%, up 0.2 percentage points from January. Driven by the holiday effect, industries related to resident travel and consumption saw rapid growth in business volume. The Business Activity Indices for sectors such as accommodation, catering, culture, sports, and recreation were all in high景气区间above 60.0%. Retail and air transport sectors also saw their indices rise above 52.0%. Meanwhile, industries like capital market services and real estate operated with low Business Activity Indices, indicating subdued market activity. The Services Business Activity Expectation Index was 55.8%, remaining in a high景气区间, suggesting service sector firms maintain optimism about near-term market development.
The construction sector experienced a decline in景气水平. Influenced by the concentration of workers returning home for the Spring Festival and the suspension of some construction projects, the Construction Business Activity Index fell to 48.2%, down 0.6 percentage points from January, indicating a continued decline in the sector's prosperity. However, the Construction Business Activity Expectation Index rose to 50.9%, up 1.1 percentage points from January, moving back above the 50-point threshold, signaling a recovery in confidence among construction companies regarding future industry development.
An analyst from the China Logistics Information Center concluded that overall, the non-manufacturing sector's景气水平showed little change from the previous month. The construction sector exhibited characteristics of an off-season, while holiday-related consumption sectors saw a significant boost in景气度. Financial support for the real economy remained relatively strong. Enterprises maintain stable and optimistic expectations for the future market. Following the holiday, work resumption will proceed steadily. With the commencement of key investment projects, activity in the construction sector, closely tied to investment, is expected to be released, leading to a gradual recovery in its景气水平. Meanwhile, the景气水平for consumption-related services may slightly decline due to the high base effect formed during the Spring Festival period. However, the gradual restoration of offline consumption scenarios after the holiday is also expected to help stabilize the operation of these service sectors.