China factory activity picks up steam, surveys show

By Kelvin Chan, Associated Press | Posted - Feb. 28, 2017 at 9:56 p.m.

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HONG KONG (AP) — China's factory activity picked up pace last month, surveys released Wednesday showed, adding to recent evidence that a key sector of the world's No. 2 economy is stabilizing.

The private and official purchasing managers' indexes, which are widely watched for insights into Chinese manufacturing, rose in February and were close to multiyear highs set in recent months.

The official Chinese Federation of Logistics and Purchasing's PMI rose to 51.6 in February from 51.3 the previous month.

The latest reading is a notch lower than November's two-year high of 51.7.

The report said growth in new export orders outpaced the expansion in total new orders, suggesting that global instead of domestic demand was the main factor behind the strong performance.

China's vital manufacturing sector, which employs many millions of workers, has improved over the past year in an upbeat sign for the wider economy, which saw growth cool to a three-decade low of 6.7 percent in 2016.

However, analysts warn the recovery might not be sustained. Regulators are moving to tighten up lending controls and tamp down what they consider to be a dangerously quick rise in debt and surging housing costs.

The separate private PMI by Caixin also showed a improvement as it expanded for the sixth straight month. It rose to 51.7 last month from 51.0 in January, near the four-year high of 51.9 posted at the end of 2016.

Both indexes are based on a 100-point scale on which numbers above 50 indicate expansion. The official survey is tilted more toward larger, state-run enterprises while the survey by financial magazine Caixin is focused on small and medium private companies.

Meanwhile, China's service industries seem to be weakening. The official non-manufacturing PMI , which is a better indicator of domestic demand, fell to 54.2 from 54.6 the previous month, led by a drop in construction activity.

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Kelvin Chan


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