- Prior was 49.3
- Non-manufacturing 49.5 vs 49.4 prior
- Composite 49.5 vs 49.8 prior
The malaise in the Chinese economy continues. Worse is that this is headed in the wrong direction and deeper into contractionary territory. You would think sentiment would improve as tariffs are lowered following the US supreme court decision but the domestic economy isn’t helping.
China manufacturing PMI
The unofficial PMI from RatingDog for February was released shortly afterwards:
- 52.1 vs 50.2 expected
- Prior was 50.3
- Services PMI 56.7 vs 52.3 prior
Well this muddies things. This is the best post-pandemic reading and is headed in the opposite direction of the official data. You wonder if this better-captured the US tariff news as this report is more export-oriented.
New orders are doing the heavy lifting here. They rose for the ninth straight month and at the fastest clip since December 2020. Export orders in particular stood out, growing at the most pronounced pace since September 2020 — a sign that global demand for Chinese goods is picking back up in a meaningful way.
On the production side, output growth hit its highest level since June 2024, with firms ramping up purchasing activity for the second consecutive month. Input stocks expanded at the quickest rate since last August. Suppliers had no trouble keeping up either — delivery times actually shortened slightly.
The inflation story is worth watching. Input costs surged to a 44-month high, with metals prices leading the way. Manufacturers passed some of that along, raising output charges for the second month running, though the charge inflation rate only ticked up to a 15-month high. That pass-through dynamic bears monitoring.
Employment remains the soft spot. Staffing levels rose only fractionally — the second consecutive monthly increase but still nothing to write home about. Firms are clearly cautious about adding headcount even as backlogs of work build.
RatingDog founder Yao Yu struck an optimistic but measured tone:
“Overall, February’s data show a strong expansion driven by robust supply and demand, with a notable external demand rebound. Looking ahead, the sustainability of this momentum depends on persistent demand and whether confidence translates into more active hiring and investment.”
Business confidence jumped to an 11-month high, with firms citing stronger market demand and new production lines. That’s encouraging, but as Yao noted, the real test is whether this confidence actually flows through to investment and hiring decisions.
The manufacturing PMI is expected to hold in expansionary territory near-term, but the durability of this cycle hinges on whether the export strength can persist amid a still-uncertain global trade backdrop.
