China: PMI in contraction mode for second consecutive month in February
March 1, 2015
The Purchasing Managers’ Index (PMI) rose slightly from 49.8% in January to 49.9% in February, according to the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP), which publish the index. As a result, the PMI now rests below the 50%-threshold that separates contraction from expansion in the manufacturing sector for the second consecutive month. The print overshot the 49.7% that market analysts had expected.
February’s reading reflected deteriorations in three of the five subcategories that make up the index. Both manufacturing output and employment reached their lowest levels in two years, while the supplier delivery times category dipped into the red in February. Conversely, new orders and inventories improved over the previous month. Although input prices—a reliable leading indicator for consumer prices—hit a 3-month high, the variable remains firmly entrenched below the 50%-threshold, thereby signaling strong disinflationary pressures.