Manufacturing PMI records highest reading since April 2012. Output, new orders, delivery times all improve significantly.

China’s economy is showing signs of a stronger rebound after Covid restrictions were abandoned, with manufacturing posting its biggest improvement in more than a decade, services activity climbing.

The country announced the PMI index of the manufacturing and service industries. In February, the manufacturing PMI reached 52.6, which is the strongest recovery of the Chinese economy in nearly 11 years. In an industry, the more orders, the stronger the demand, the more prosperous the business activities, the higher the PMI index will be. The PMIs provide the first comprehensive data of the economy’s recovery after Covid restrictions were dropped late last year, infection waves began easing and businesses returned to normal after the Lunar New Year holidays. 

Although there were “significant seasonal and event factors” influencing the PMI figures, the “overall trend still points to a solid recovery at the beginning of 2023,” said Zhou Hao, chief economist at Guotai Junan International. “The decent PMI readings provide a positive note for the upcoming National People’s Congress,” with the government expected to roll out further supportive policies to cement the recovery, he said.

The real situation behind the data is that the confidence of Chinese small and medium-sized enterprises has risen to a near two-year high, employment has begun to recover, logistics recovery has accelerated, and corporate procurement has also increased. Manufacturing companies have confidence in the future economic prosperity. For overseas consumers, stable upstream inventory and price levels mean that there is room for cost reduction, and they can get more reasonable price quotations for products and services.