China’s factory activity has expanded at the fastest pace in more than a decade, as the world’s second largest economy staged what economists are calling a “very rapid” rebound after reopening from zero-Covid.
The government’s official purchasing managers’ index (PMI) for the manufacturing industry hit 52.6 in February, the highest level since April 2012, according to data released Wednesday by the National Bureau of Statistics.
In January, the reading was 50.1, a sharp increase from the month before, as disruptions caused by the abrupt end of pandemic restrictions was starting to fade. China scrapped most of those restrictions in early December.
A reading below 50 indicates contraction, while anything above that shows expansion.
The official non-manufacturing PMI for February, which includes the construction and services industries, recorded its best level in two years, figures from the NBS showed. The reading was at 56.3, compared to 54.4 in January.
Also Wednesday, the Caixin/Markit manufacturing PMI, a private gauge of the country’s factory activity, jumped to 51.6 in February from 49.2 in January. It was the first expansion in seven months.
The official PMIs mainly cover larger businesses and state-owned companies, while the Caixin readings are more focused on smaller businesses and private companies.
The robust data has boosted Asian stocks. Hong Kong’s Hang Seng Index was up more than 3%, leading gains in the region, and poised to record the biggest daily increase in three months.
The latest data is “exceptionally strong,” confirming a “very rapid rebound” in China’s economic activity, Julian Evans-Pritchard, head of China economics at Capital Economics, wrote in a research note.
“They underscore just how quickly activity has bounced back following the reopening wave of infections,” he said, adding that his firm’s 5.5% growth forecast for China this year may be too conservative.
On Wednesday, Moody’s Investors Services raised its forecast for China’s real GDP growth to 5% for both 2023 and 2024, up from 4% previously, citing a “stronger than expected” rebound in the short term after the government fully relaxed Covid restrictions.
