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China PMI February 2024

China: Manufacturing PMI dips in February; non-manufacturing PMI improves

The National Bureau of Statistics’ Manufacturing Purchasing Managers’ Index (PMI) dipped to 49.1 in February from 49.2 in January, matching market expectations. Consequently, the index remained below the 50.0 no-change threshold, signaling a continued deterioration in manufacturing sector operating conditions from the previous month. The headline print reflected improvements in the readings for output and employment.

The National Bureau of Statistics’ non-Manufacturing PMI came in at 51.4 in February, up from 50.7 in January and above market expectations. This was the result of stronger services activity more than offsetting a further slowdown in construction. Services activity likely benefited from New Year’s holiday spending. Meanwhile, construction slowed due to the government’s efforts to reign in local debt and as the boost from Q4’s extra government bond issuance faded.

On the data and outlook, Nomura analysts said:

“The official PMIs are claimed to be seasonally adjusted. However, due to the shifting timing of the LNY holiday, any seasonal adjustment for LNY should be taken a pinch of salt. The sequential data in January-March should be cautiously interpreted, […]. With the manufacturing sector showing few signs of improvement, we expect the official manufacturing PMI to remain well below 50 in March. The service PMI could retreat markedly after February, as high-frequency mobility data after the LNY holiday suggest pent-up demand has quickly faded.”

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