China’s purchasing managers’ indices for February show a slight retrenchment in overall activity as the Lunar New Year holiday and lingering demand weakness combined to push the manufacturing PMI below the expansion threshold. The National Bureau of Statistics reported a manufacturing PMI of 49.0% and a composite output index of 49.5%, both down modestly from January, while the non‑manufacturing business activity index ticked up to 49.5%.
Beneath the headline figures the picture is mixed. The manufacturing production index fell to 49.6% and the new‑orders index to 48.6%, indicating softer month‑on‑month output and demand. Inventory readings showed only a slight improvement, with the raw‑materials inventory index at 47.5% after a marginal rise, and supplier delivery times slowed to 49.1%. Employment in manufacturing remains subdued: the sector’s employment index was 48.0%, little changed but below the critical 50 point.
The broad contours of the month are marked by a divergence between large and smaller firms. Large manufacturers expanded, with a PMI of 51.5% (up 1.2 points), while medium and small enterprises registered contraction at 47.5% and 44.8% respectively. High‑technology manufacturing again outperformed, with a PMI of 51.5%, whereas consumer goods, equipment manufacturers and energy‑intensive industries either hovered near or below the 50 cutoff.
Services showed a degree of resilience owing to holiday spending: the services business activity index stood at 49.7%, supported by accommodation, catering and cultural and entertainment sectors—each reporting indices above 60.0%—and stronger retail and air travel activity. Yet other services, notably capital‑market related services and real estate, continued to languish below 50. Non‑manufacturing input costs rose (input prices index at 50.9%), but selling prices remained weak at 48.8%, suggesting limited pass‑through of higher costs.
Taken together, the composite PMI output index of 49.5% points to a modest month‑on‑month slowdown in business activity. The NBS emphasized that February’s data are seasonally adjusted and that the holiday timing—this year longer and concentrated in the middle and latter part of February—likely dampened activity, particularly for smaller, labour‑intensive firms. The surveys covered roughly 3,200 manufacturing and 4,300 non‑manufacturing firms and use established PMI weighting practices.
Why this matters: the data underline a fragile, uneven recovery. Large, capitalised and high‑tech manufacturers are demonstrating the benefits of China’s industrial upgrade strategy, but weak demand for SMEs, persistent employment softness and muted selling prices point to structural demand challenges. For global markets, a softer Chinese PMI implies nearer‑term downside for commodity demand and supply‑chain volumes, while policymakers in Beijing will watch March closely for a post‑holiday rebound before deciding whether to calibrate additional targeted support.