China’s economic recovery continued but slowed more than expected in February

03-Mar-2021 Intellasia | South China Morning Post | 5:02 AM Print This Post

China’s economic recovery continued in February, but at a slower-than-expected pace, with all major sectors posting their lowest growth rates since last spring.

The data encompasses the Lunar New Year holiday period, during which economic activity usually slows. But a spike in coronavirus infections in northern China in January might have depressed activity in February more than usual, especially in the service sector, after the government urged workers not to return to their hometowns for the holidays to avoid spreading infections.

The official manufacturing purchasing managers’ index (PMI) a survey of sentiment among factory owners in the world’s second-largest economy fell to 50.6 last month from 51.3 in January, according to the National Bureau of Statistics (NBS).

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February’s reading was below the median prediction of 51.1 in a Bloomberg poll of analysts, and was the lowest since February 2020, when the index hit a record low of 29.6 at the height of the coronavirus lockdowns.

China’s non-manufacturing PMI a gauge of sentiment in the service and construction sectors fell to 51.4 in February from January’s reading of 52.4. The result was also below expectations, with analysts predicting a smaller decline to 52.1. The non-manufacturing index was the lowest since May 2020, which was second only to the all-time low of 35.7 reported in February last year.

Within the non-manufacturing PMI, the sub-index for the construction sector fell to 54.7 in February from 60.0 in January, while the service sector business activity index fell to 50.8 from 51.1.

A reading above 50 indicates growth in sector activity, while a reading below the mark represents contraction. The higher the reading above 50, the faster the pace of expansion.

The official composite PMI a combination of the manufacturing and non-manufacturing indices fell to 51.6 in February from 52.8 in January.

The [Lunar New Year] holiday had a great impact on the production and operation of companies. The market vitality of the manufacturing sector experienced a certain decline, with the level of activity having fallen from the previous month

Zhao Qinghe

NBS senior statistician Zhao Qinghe attributed the slowdown in economic activity mainly to the annual holiday.

“The [Lunar New Year] holiday had a great impact on the production and operation of companies. The market vitality of the manufacturing sector experienced a certain decline, with the level of activity having fallen from the previous month,” he said.

Zhao said the expansion pace of both production and demand in the manufacturing sector weakened in February, and the vitality of both imports and exports declined.

The new manufacturing export order index fell to 48.8 in February from 50.2 in January, indicating a contraction in foreign demand during the month.

Zhao also pointed to a labour shortage in some industrial sectors.

“At present, some manufacturing companies have a labour gap, and the pressure on labour costs has increased,” he said.

In the February survey, 36.2 per cent of companies said their labour costs were high and 18.3 per cent of companies said they were experiencing a shortage of labour supply, both of which were at the highest level of recent times.

The employment indices for both manufacturing and non-manufacturing sectors showed bigger contractions in February than in January.

“Due to the Lunar New Year holiday and weather factors, the progress of projects in the construction industry has slowed,” Zhao said, explaining the sharp drop in the construction sector index.

He also said that despite the overall slowdown in service sector activity, consumer spending related-sectors grew in February.

“The business activity indices of the retail, catering, entertainment and other sectors closely related to household consumption are all in the expansion range and higher than the previous month, with business activities relatively active,” he said.

https://sg.news.yahoo.com/china-economic-recovery-continued-slowed-071453054.html

 

Category: China

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