The manufacturing purchasing managers’ index (PMI) shot up
to 52.6 from 50.1 in January, according to the National Bureau of Statistics,
above the 50-point mark that separates expansion and contraction in activity.
The PMI far exceeded an analyst forecast of 50.5 and was the highest reading
since April 2012.
The world’s second-largest economy recorded one of its worst
years in nearly half a century in 2022 due to strict COVID lockdowns and
subsequent widespread infections. The curbs were abruptly lifted in December as
the highly transmissible Omicron spread across the country. Global markets
cheered the big surprise in the PMI with Asian stocks and the Australian dollar
reversing earlier losses, the offshore yuan perking up and oil rallying, as
investors took a more optimistic view on China’s economic prospects.
“While we need to treat these numbers will caution as there
might be significant seasonal and event factors, the overall trend still points
to a solid recovery at the beginning of 2023,” said Zhou Hao, economist at
Guotai Junan International. Markets expect the annual meeting of parliament,
which kicks off this weekend, will set economic targets and elect new top
economic officials.
“The decent PMI readings provide a positive note for the
upcoming National People’s Congress. We expect the government to roll out
further supportive policies to cement the economic recovery,” said Zhou. The
official PMI came out just before an upbeat private sector index from
Caixin/S&P that showed activity rising for the first time in seven months.
Businesses accelerated their resumption of work and
production, as the effect of economic stabilisation policies was felt by the
sector while the impact of COVID-19 receded, the NBS said in a separate
statement. While the manufacturing sector has started to see more signs of
recovery, it had remained under pressure with factory-gate prices falling in
January due to still cautious domestic consumption and uncertain foreign
demand.
The official non-manufacturing purchasing managers’ index
(PMI) rose to 56.3 from 54.4 in January, indicating the fastest pace of
expansion since March 2021. On Friday, China’s central bank said the domestic
economy was expected to generally rebound in 2023, although the external
environment remained “severe and complex.”