China: Auspicious results from February PMIs – UOB

UOB Group’s Economist Ho Woei Chen assesses the latest release of the Chinese PMIs.

Key Takeaways

“China’s manufacturing and non-manufacturing PMIs jumped in Feb to suggest that the economic recovery momentum was more robust than expected. The corresponding rebound in the Caixin China manufacturing PMI to 51.6 (Bloomberg est: 50.7; Jan: 49.2) lends further credence to the positive outlook for the manufacturing sector.”

“The leading indicators temporarily dispel market’s worries that the rebound since China’s dismantling of its zero-Covid policy will not be able to sustain due to the downturn in global demand and persistent weak confidence in the domestic real estate market. There are also early indications that gains from the reopening of China’s economy are filtering down to employment and firms’ pricing powers.”

“We retain our cautiously optimistic outlook for China’s GDP growth at 5.2% this year and continue to watch for China’s consumption recovery, the domestic real estate market as well as the extent of slowdown in global demand. A stable Covid situation, stronger fiscal and monetary policy support at the upcoming National People’s Congress (NPC) will also boost the outlook for China this year.”