BEIJING (Reuters) – China’s manufacturing activity expanded in February at a slower pace than in the previous month, reaching its lowest level since last May and losing market expectations after brief interruptions related to COVID-19 earlier in the year. year.
The official manufacturing purchasing managers’ index (PMI) dropped 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 that separates growth from contraction. .
Analysts had expected it to drop to 51.1.
Chinese manufacturing activity is usually dormant during the Lunar New Year holidays, when workers return to their hometowns. This year, the government called on workers to remain local to curb the spread of COVID-19.
In general, China’s economic recovery is picking up pace due to robust exports, pent-up demand and government stimulus.
The official PMI, which focuses mainly on large, state-owned companies, showed that the sub-index for new export orders was 48.8 in February compared to 50.2 in January, returning to contraction after months driven by external demand.
A sub-index of activity among small businesses stood at 48.3 in February, against 49.4 in the previous month. Smaller companies were most affected by the seasonal effects of the Lunar New Year, said Zhao Qinghe, an NBS official in comments released with the data.
An employment sub-index in the official PMI stood at 48.1 in February, down from 48.4 in January, as companies laid off more workers and at a faster rate.
Still, some companies in the manufacturing sector are seeing increasing pressure from rising labor costs and a shortage of workers, said Zhao.
Factory prices in China rose in January, for the first time in a year, as months of strong growth in manufacturing increased raw material costs.
China achieved 2.3% economic growth last year. This year, the government can avoid setting a growth target for fear that provincial economies will feel pressured to take on more debt, policy sources told Reuters.
China will strengthen political support for foreign trade and ensure the smooth functioning of supply chains, said its new minister of Commerce earlier this week.
In the service sector, activity grew for the 11th consecutive month, but at the slowest pace in a year.
(Reporting by Gabriel Crossley; Additional reporting by Colin Qian; Editing by Christopher Cushing)