BEIJING (Reuters) – China’s factory activity expanded in February at a slower pace than the previous month, hitting its lowest level since May last year and losing market expectations following a brief COVID-related breakout -19 earlier in the year.
The Manufacturing Official Purchasing Manager’s Index (PMI) fell to 50.6 from 51.3 in January, data from the National Bureau of Statistics (NBS) showed on Sunday, staying above the 50-point mark separating growth from shortening .
Analysts expected it to fall to 51.1.
Chinese factory activity usually takes place during the Lunar New Year’s break as workers return to their home towns. This year, the government appealed to workers to stay local to prevent the spread of COVID-19.
Overall, China’s economic recovery has been on the rise due to strong exports, pent-up demand and government stimulus.
The official PMI, which is largely focused on large and state-owned companies, showed that the sub-record for new export orders in February was 48.8 compared to 50.2 in January, going back to shortening after months driven by foreign demand.
Subprime for activity among small firms was at 48.3 in February against 49.4 a month earlier.
The subprime for employment in the official PMI was at 48.1 in February, down from 48.4 in January when companies laid off more employees and at a faster pace.
Chinese factory gate prices rose year-on-year in January for the first time in a year, as months of strong manufacturing growth pushed raw material costs higher.
China posted 2.3% economic growth last year. This year, the government may avoid setting a growth target for fear that regional economies will feel pressure to take on more debt, policy sources previously told Reuters.
China will consolidate policy support for foreign trade and ensure smooth supply chain supply chains, the new trade minister said earlier in the week.
In the services sector, activity expanded for the 11th consecutive month but at a slower pace.
Reporting by Gabriel Crossley; Additional commentary by Colin Qian; Edited by Christopher Cushing