February PMI data show growing optimism on China's economy

BEIJING - Fresh snapshots of China's manufacturing and non-manufacturing sectors showed a more positive outlook on the economy despite a seasonal dip in factory activities.

Official data released on Thursday showed China's manufacturing sector expanded at a slower pace in February.

The country's manufacturing purchasing managers' index (PMI) came in at 49.2 in February, narrowing from 49.5 in January, according to the National Bureau of Statistics (NBS).

A reading above 50 indicates expansion, while a reading below reflects contraction.

The sub-index for production, a major factor used in calculating PMI, edged down 1.4 points to 49.5 in February, while the sub-index for new orders rose to 50.6, an indication of expansion.

NBS senior statistician Zhao Qinghe attributed the monthly decline in the manufacturing PMI to seasonal factors including production halts around the Chinese Lunar New Year.

Zhao also noted the growing strength of new sources of growth, as the sub-index for production of the high-tech manufacturing sector continued to rise.

Activities of hi-tech enterprises in the sectors of pharmaceutical manufacturing and communication equipment showed above-average vitality, Zhao said.

Commenting on the February manufacturing PMI data, investment banking firm CICC said China's domestic demand is showing signs of recovery.

"Deflationary pressure receded in February, and production and business expectations rebounded visibly," CICC said.

Thursday's data showed a four-month high reading of 56.2 for the production and operation expectations index, a marked rise of 3.7 points from January.

"Manufacturing PMI may rebound in the near term if the moderately reflationary credit cycle sustains," CICC said.

The non-manufacturing purchasing managers' index came in at 54.3 this month, which means the non-manufacturing sector remained within the expansion range, according to the NBS.

Indices for sectors including railway and air transport, telecom, banking and leasing stood above 55, indicating robust business growth.

Market sentiment is improving as sub-indices for new orders and business expectation picked up by 0.3 and 1.8 points respectively from January, indicating growing service demands, the NBS said.

The construction sector saw its activities shrink due to the Spring Festival holiday and bad weather but is likely to pick up the pace in the future as data shows rising business expectations.