The China Purchasing Managers' Index for February indicated that the manufacturing PMI stood at 49.0%, a decline of 0.3 percentage points from the previous month, influenced by factors including the Spring Festival holiday. The non-manufacturing business activity index was 49.5%, up by 0.1 percentage points from January. The composite PMI output index registered 49.5%, down 0.3 percentage points month-on-month.
Historical data shows that the PMI typically experiences some volatility during the month containing the Spring Festival. This year, the holiday period was extended and fell entirely in the latter half of February, which affected business production and operations, leading to an overall decrease in manufacturing market activity.
In February, the sub-index for manufacturing production was 49.6%, and the new orders index was 48.6%, down by 1.0 and 0.6 percentage points, respectively, from the previous month, indicating a slowdown in both production and market demand.
The PMI for large enterprises was 51.5%, rising 1.2 percentage points from January and remaining in expansion territory. Medium and small enterprises were more significantly impacted by the holiday; their PMI readings were 47.5% and 44.8%, respectively, down 1.2 and 2.6 percentage points, reflecting a decline in business sentiment.
The high-tech manufacturing PMI was 51.5%, continuing its expansion and significantly outperforming the overall manufacturing average, indicating robust development in related industries. The consumer goods industry PMI was 48.8%, up 0.5 percentage points from the prior month, showing a recovery in sentiment. The equipment manufacturing and high-energy-consuming industries recorded PMIs of 49.8% and 47.8%, down 0.3 and 0.1 percentage points, respectively, indicating some softening in activity.
Seasonal factors continued to influence the manufacturing sector in February, leading to a moderation in its performance. However, this slowdown is viewed as temporary, with positive underlying developments continuing to accumulate. As the impact of the Spring Festival recedes, and with ongoing implementation of policies aimed at stabilizing the economy, boosting domestic demand, and supporting foreign trade, manufacturing activity is expected to stabilize and rebound in March.
Attention should be paid to geopolitical developments, particularly their potential impact on international commodity markets and subsequent spillover effects, as well as implications for China's foreign trade.
The non-manufacturing business activity index edged up 0.1 percentage points to 49.5% in February, indicating a slight improvement in overall sentiment. The services business activity index rose 0.2 percentage points to 49.7%. In contrast, the construction business activity index fell to 48.2%, down 0.6 percentage points, as projects were suspended during the holiday period when workers returned home.
Sectors closely tied to Spring Festival consumption, such as retail, accommodation, catering, and entertainment, performed well, with their business activity indices rising to varying degrees. Financial services for the real economy remained strong, with the monetary and financial services activity index and new orders index staying above 60% for three consecutive months. Business expectations remained relatively stable, with the business activity expectation index holding at a high level of 55%.
Following the holiday period, as the production and construction season begins and key projects resume, activity in construction and production-oriented services is expected to improve. While the consumer-related services sector may see some moderation due to the high base effect from holiday spending, the gradual resumption of social activities is likely to help stabilize sentiment in these industries.