China: PMIs surprised to the upside in February – UOB

Economist at UOB Group Ho Woei Chen, CFA, comments on the latest PMI releases in the Chinese economy.

Key Takeaways

“China’s official manufacturing and non-manufacturing Purchasing Manager’s Indexes (PMIs) unexpectedly improved in Feb. The private sector Caixin manufacturing PMI also returned to expansion (defined as reading above 50).”

“The improvement was against market’s expectation for a softer PMI reading in Feb as activities dwindled due to the Lunar New Year holidays while the pandemic containment measures were expected to have restrained the recovery in consumption demand.”

“Input prices rose for both manufacturing and non-manufacturing as inflationary pressure picked up in Feb.”

“To stabilise the economic outlook, China is likely to unveil more supportive fiscal measures at the upcoming National People's Congress (NPC) that kicks off this Sat (5 Mar). Consistent with the average annual growth of 5.1% in the last two years, we expect China to adopt growth target of ‘above 5%’ for 2022, compared to ‘above 6%’ in 2021.”