By Ellen Zhang and Ryan Woo
BEIJING, March 4 (Reuters) – China’s factory activity in February expanded at the fastest pace since December 2020, boosted by strong demand that helped lift manufacturers’ confidence, a private sector survey showed on Wednesday.
RatingDog’s China Overall Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 52.1 in February from 50.3 in January, easily beating analysts’ forecasts of 50.2 and marking the highest level in more than five years. The 50 mark separates growth from contraction.
The result contrasted with an official survey released earlier in the day that showed factory activity contracted for the second straight month in February.
Analysts say differences in survey coverage and respondent profiles often contribute to divergent readings.
Demand for Chinese manufactured goods strengthened in February, the private survey showed, with the volume of new orders rising for the ninth straight month and at the fastest pace since December 2020. That propelled output growth to the strongest on record since June 2024.
Foreign demand recovered markedly, with new export orders rising at the steepest pace since September 2020.
An outdoor furniture seller based in eastern China said, on condition of anonymity, that due to the improvement in the supply chain and overseas warehouses, its orders increased by 30% to 40% in January from a year earlier, while February orders continued to grow.
The manufacturing PMI is expected to maintain a moderate expansionary trend in the short term, said Yao Yu, founder of RatingDog.
“Looking ahead, the sustainability of this momentum depends on persistent demand and whether confidence translates into “more active hiring and investment.”
Economists say China will benefit from the US Supreme Court’s ruling against emergency tariffs imposed by President Donald Trump last year, as narrowing the tariff gap with other countries may give it some advantages.
The U.S. Trade Representative’s office said Monday that the country will seek to manage bilateral trade with China for better balance and fairness and will monitor Beijing’s compliance with a trade truce reached last year.
Chinese manufacturers were more optimistic about their future output in February, and overall sentiment was the highest in 11 months, the S&P survey showed.
Although backlogs increased in February, when many factories sent workers home for the Chinese New Year, manufacturers remained cautious in hiring. Employment increased only a fraction for the second month, but this marked the first consecutive increase since mid-2021.