Data released by the National Bureau of Statistics on March 4 showed that the Manufacturing Purchasing Managers' Index (PMI) for February was 49.0%, a decrease of 0.3 percentage points from the previous month. The Non-Manufacturing Business Activity Index stood at 49.5%, up by 0.1 percentage points from January. The Composite PMI Output Index was 49.5%, down 0.3 percentage points month-on-month.
Regarding the reasons for the change in the February PMI, a chief statistician from the NBS Service Industry Survey Center pointed out that historically, the PMI for the month containing the Spring Festival often shows some fluctuation. This year, the holiday period was extended and fell entirely in the latter half of February, which affected normal business production and operations, leading to an overall decline in manufacturing market activity.
Among the 13 sub-indices, the Raw Materials Inventory Index and the Production & Business Activity Expectation Index increased compared to the previous month, rising by 0.1 and 0.6 percentage points respectively. The Ex-Factory Price Index remained unchanged. The Production Index, New Orders Index, New Export Orders Index, Backlog of Orders Index, Finished Goods Inventory Index, Quantity of Purchases Index, Imports Index, Input Prices Index, Employment Index, and Suppliers’ Delivery Time Index all declined, with decreases ranging from 0.1 to 2.8 percentage points.
A special analyst from the China Federation of Logistics & Purchasing commented that the continued decline in the February PMI reflects both the impact of the Spring Festival and indicates ongoing downward pressure on the economy. Order-related indices remained below the 50-point mark and continued to fall, with the New Export Orders Index showing a significant drop, highlighting persistent insufficient demand. Affected by this, the Production Index and Quantity of Purchases Index both decreased and stayed below the 50-point threshold, indicating weak corporate confidence in the market. However, with the convening of the National People's Congress, positive policy influences are beginning to bolster business sentiment, as seen in the rise of the Production & Business Activity Expectation Index.
The analyst emphasized that the economy is currently at a critical stage of building momentum for recovery. It is essential to significantly increase government investment in public goods, substantially expand demand, boost corporate orders, and use sufficiently strong macroeconomic policies for counter-cyclical and cross-cyclical adjustment. This approach is vital to effectively reverse the demand contraction guided by market signals, fully leverage the government's macroeconomic governance efficacy, vigorously boost corporate confidence, and strive for a strong start to the 15th Five-Year Plan period.
An analyst from the China Logistics Information Center noted that seasonal factors continued to impact the manufacturing sector in February, leading to a slowdown in operations. However, this slowdown is considered short-term, and positive changes are still accumulating. In March, as the influence of the Spring Festival holiday subsides, temperatures rise across the country, and factories and construction sites resume full operations, economic and social activities are expected to return to a normal track.
The Non-Manufacturing Business Activity Index saw a slight increase in February to 49.5%, up 0.1 percentage points from the previous month. By sector, the Construction Business Activity Index was 48.2%, down 0.6 percentage points month-on-month, while the Service Industry Business Activity Index was 49.7%, up 0.2 percentage points.
Among the sub-indices of the non-manufacturing PMI, the Inventory Index and Input Prices Index increased compared to the previous month, rising by 0.6 and 0.9 percentage points respectively. The Sales Price Index remained unchanged from January. The New Orders Index, New Export Orders Index, Backlog of Orders Index, Employment Index, Suppliers’ Delivery Time Index, and Business Activity Expectation Index all declined, with decreases ranging from 0.1 to 2.2 percentage points.
A vice president of the China Federation of Logistics & Purchasing stated that the slight month-on-month increase in the Non-Manufacturing Business Activity Index in February still left it below the 50% threshold, primarily due to the Spring Festival impact. Sectors like construction and water transport experienced a decline in景气度 (business climate). The Construction Business Activity Index fell for the second consecutive month, remaining below 49%. The Business Activity Indices for water transport and road transport both dropped below 47%.
Conversely, consumer-oriented service industries closely linked to holiday spending, such as retail, accommodation, catering, culture, and sports entertainment, performed well, with their Business Activity Indices showing varying degrees of increase from the previous month. Corporate expectations remained relatively stable, with the Business Activity Expectation Index holding at a relatively high level of 55%.
It is anticipated that after the Spring Festival, with the arrival of the production and construction season and the comprehensive resumption of work, the commencement of key projects will drive an improvement in the景气度 of investment-related sectors like construction and producer services. Meanwhile, due to the high base effect of holiday consumption, the景气度 of consumption-related service industries may decline somewhat. However, the gradual resumption of social activities is also expected to help stabilize the business climate in these sectors.
An expert from the China Logistics Information Center highlighted that the Business Activity Index and New Orders Index for the monetary and financial sector have remained above 60% for three consecutive months, indicating that financial activities—primarily bank credit—and market demand continue to trend positively. Banks are maintaining strong support for the real economy. Looking at expectations, the Business Activity Expectation Index for monetary financial services remains at a high level above 65%. Guided by a moderately loose monetary policy, financial-related industries are expected to continue supporting the real economy.