By Mark Magnier
BEIJING--A preliminary measure of China's manufacturing activity
improved modestly in February, even as the export sector in the
world's second largest economy remained sluggish.
Analysts said Beijing's looser monetary policy in recent months
appears to have channeled more capital into domestic investment.
But they cautioned against reading too much into the monthly
figures, given that China's Lunar New Year holiday--which ended
this week--can play havoc with many indicators.
"The figure marginally expanded," said Oliver Barron, head of
China research at investment bank North Square Blue Oak. "But it's
not necessarily a sign of a stronger economy. The potential pickup
is from a very weak January. We're far from seeing a strong
economic recovery."
The preliminary HSBC China Manufacturing Purchasing Managers'
Index, a gauge of nationwide manufacturing activity, rose to 50.1
in February compared with a final reading of 49.7 in January, HSBC
Holdings PLC said Wednesday.
The reading marked the first expansion in Chinese manufacturing
activity in four months. A reading below 50 indicates a contraction
in manufacturing activity from the previous month, while a reading
above indicates expansion.
"Today's data point to a marginal improvement in the Chinese
manufacturing sector going into the Chinese New Year period in
February, " HSBC's chief economist for China, Qu Hongbin, said in a
statement.
"However, domestic economic activity is likely to remain
sluggish and external demand looks uncertain. We believe more
policy easing is still warranted at the current stage to support
growth," he said.
The output and new order subindexes increased at a faster rate
in February than in January, while new export orders contracted for
the first time since April 2014, said HSBC and data provider
Markit. Both input and output prices remained in contraction
territory.
The HSBC China Manufacturing PMI is based on data compiled from
monthly replies to questionnaires sent to purchasing executives in
more than 420 manufacturing companies. The preliminary figure is
based on 85% to 90% of the responses to its PMI survey.
HSBC is scheduled to release its final PMI data on Monday.
China's official manufacturing PMI fell to a
weaker-than-expected 49.8 in January from 50.1 in December, its
first slip below 50 since September 2012.
Grace Zhu and William Kazer contributed to this article.
Write to Mark Magnier at mark.magnier@wsj.com
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