China factory output shrinks for fifth month

BEIJING: Factory activity in China contracted for the fifth straight month in February, official figures showed Friday, as sluggish demand in the world’s second-largest economy continues to drag on growth. The purchasing managers’ index (PMI) a key measure of factory output - came in at 49.1 percent in February, according to China’s National Bureau of Statistics (NBS). A PMI figure above 50 percent indicates an expansion in activity, while below indicates a contraction.

China’s monthly PMI has only registered in positive territory twice throughout the last year, most recently in September. Factory activity has consistently contracted since then, with February marking the fifth consecutive month of decline.

Analysts polled by Bloomberg had expected a PMI figure of 48.8 percent in February. In December 2022, Beijing abruptly lifted draconian COVID-19 control measures that had weighed heavily on the economy for nearly three years, raising expectations for a sustained recovery.

But such hopes have been dampened by a lack of consumer and investor confidence, unprecedented turmoil in the property sector and soaring youth unemployment. A global slowdown, meanwhile, is weakening demand for Chinese products overseas. In recent months, authorities have announced a series of targeted measures as well as a major issuance of sovereign bonds to boost infrastructure spending and revive economic activity. But results have been mixed. China’s weeklong Lunar New Year period — the longest annual public holiday — occurred in February this year, also partially explaining the slowdown in activity. China’s non-manufacturing PMI — which takes into account the services sector — remained in positive territory in February at 51.4 percent, up from 50.7 percent the previous month, the NBS said Friday. The latest figure came in higher than expected for analysts polled by Bloomberg, who had predicted it to stand at 50.2 percent.

China is gearing up to unveil official economic goals for the current year on Tuesday, including the highly anticipated GDP growth target — expected to be among the lowest in three decades. The country notched GDP growth of 5.2 percent last year, according to an official figure that many economists consider to be an overestimate, despite already representing the lowest expansion since the 1990s apart from the pandemic years.