Chinese business optimism strengthens in Feb for 2nd consecutive month

The headline seasonally-adjusted PMI for manufacturing rose from 50.8 in January to 50.9 in February, to signal another marginal improvement in the health of the sector. Business conditions have now strengthened in each of the past four months, with the latest PMI reading the best recorded since August 2023.

Companies noted further upturns in both production and new work, with rates of growth quickening slightly from January, helped in part by a rise in new export orders.

The business mood also brightened, with confidence around the year-ahead outlook for output reaching a ten-month high. However, firms maintained a cautious approach to staff numbers, which fell marginally in February, according to a release from S&P Global Ratings.

Average input costs rose at the weakest rate in seven months and only fractionally. Average selling prices, meanwhile, fell slightly as firms looked to attract and secure new business.

Manufacturing production across the country also rose during February. Though modest, the rate of output growth was the fastest seen since May last year, with companies generally attributing this to a sustained improvement in market conditions and greater new order volumes.

The total amount of new work placed with Chinese goods producers also rose at a quicker pace in February, albeit one that remained marginal overall. The upturn was partly driven by a second successive monthly increase in new export business, albeit only slight, with firms citing an improvement in underlying global demand conditions.

Firms expanded their purchasing activity again in February. Though modest, the rate of growth was the most pronounced since March 2023.

The rate of cost inflation continued to slow across the country’s manufacturing sector during February. Notably, input prices rose at a fractional pace that was the weakest in seven months.

ALCHEMPro News Desk (DS)