Factory activity in China picked up last month, official data showed yesterday, as market demand and production resumed following the Lunar New Year holiday.
The purchasing managers’ index (PMI) — a key gauge of manufacturing activity — edged up to 50.2, defying expectations of a return to contraction territory, data from Chinese National Bureau of Statistics data showed.
The 50-point mark separates growth from contraction.
“Enterprises resumed work and production in good shape after the holiday,” bureau senior statistician Zhao Qinghe (趙清河) said in a statement.
He added that new orders in the world’s second-biggest economy picked up, indicating that market demand returned after the holiday break.
The purchasing price index for key raw materials and the ex-factory price index increased as well, rising “markedly for two consecutive months,” Zhao said.
He said that costs for oil, coal and other materials continued to be in a “high range.”
China logged a spike in domestic COVID-19 cases in December last year and January ahead of the Winter Olympics in Beijing, with authorities scrambling to eradicate flare-ups in several major cities and restrictions such as lockdowns imposed.
Case numbers moderated after that, and non-manufacturing PMI picked up from 51.1 in January to 51.6 last month, bureau data showed.
In particular, activity in the construction sector accelerated.
However, the service industry’s performance still lags behind that of similar periods in earlier years, Zhao said.
Separately, Chinese Minister of Commerce Wang Wentao (王文濤) yesterday said that China’s economy faces multiple challenges at home and abroad this year, including “huge” pressure from uncertainty over global trade and from still-lackluster domestic consumption.
Foreign trade, which helped drive the world’s second-largest economy last year, would be confronted by uncertain external demand and a high statistical base from last year, Wang said.
“This year, the pressure on foreign trade will be huge and the situation will be very severe,” Wang told a news conference.
Labor shortages and high raw material costs have also heaped pressure on the ability of China’s small and medium-sized companies to handle overseas orders, he said.
Given the global uncertainties, China must “do everything possible” this year to spur domestic consumption, Wang said.
China would aim to broaden access to its markets and draw more foreign investment to the country’s industrial sector, including advanced manufacturing and strategic new industries, Wang said.
Foreign direct investment grew in the double-digits in January and last month, he said.
Additional reporting by Reuters
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