By Alan Zhang and Ryan Wu
BEIJING, March 4 (Reuters) – China’s factory activity expanded in February at the fastest pace since December 2020, driven by strong demand that helped lift manufacturers’ confidence, a private sector survey showed on Wednesday.
RatingDog’s China general manufacturing purchasing managers’ index (PMI), compiled by S&P Global, rose to 52.1 in February from 50.3 in January, easily beating analysts’ forecasts of 50.2 and marking the highest level in five years. The 50 mark separates growth from contraction.
The result contrasts with an official survey released earlier in the day that showed factory activity fell for the second straight month in February.
Analysts say differences in survey coverage and respondent profiles often contribute to a varied reading.
Demand for Chinese manufactured goods strengthened in February, with private surveys showing that the volume of new orders rose for the ninth consecutive month and at the fastest rate since December 2020. Since June 2024, productivity growth has been the strongest recorded.
Demand abroad has picked up significantly, with new export orders rising at the fastest pace since September 2020.
An outdoor furniture seller based in eastern China said on condition of anonymity that due to improvements in its supply chain and overseas warehouses, its orders rose 30%-40% in January from a year earlier, while February orders continued to grow.
The manufacturing PMI is expected to maintain a moderate expansionary trend in the short term, said Yao Yu, founder of RatingDog.
“Looking ahead, the sustainability of this momentum depends on continued demand and whether confidence translates into more active hiring and investment.”
Economists say that China will benefit from the order of the US Supreme Court regarding the emergency tariffs imposed by President Donald Trump last year, because the reduction of the tariff gap with other countries can provide some benefits.
The US Trade Representative’s Office said on Monday that the country will strive for a better balance and fair management of bilateral trade with China and will monitor Beijing’s observance of last year’s trade ceasefire.
Chinese manufacturers were more optimistic about their future output in February, with overall sentiment the highest in 11 months, the S&P survey showed.
Although backlogs swelled in February when many factory workers were sent home for Chinese New Year, manufacturers remained cautious in hiring. Hiring rose marginally for only the second straight month, but it marked the first consecutive increase since mid-2021.
