China's manufacturing activity in February grew at its fastest clip in six months as new order growth quickened, although output growth softened from January, data from Caixin and IHS Markit showed.
Adjusted for seasonal factors including the Chinese New Year, the Caixin/Markit Manufacturing Purchasing Manager's Index rose to 51.6, up from 51.5 in January. The index remained above the 50-point mark, signaling expansion.
Manufacturing output growth softened in February from the previous month, but production volumes rose due to an increased load of new work from January.
Companies continued to downsize to reduce costs, which along with higher new orders led to an increase in work backlogs, albeit at a weaker pace than seen in January.
Input costs continued to rise sharply in February despite the inflation rate easing to a seven-month low. Higher raw material prices prompted companies to raise selling prices in February, but at a more modest pace than January.
Business optimism for the next 12 months remained strongly positive and reached an 11-month high in February due to upcoming product releases and expectations of improving client demand.
"For now, the durability of the Chinese economy will persist," said Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group. "Looking ahead, whether demand generated from the beginning of work in March will gain strength will be key in determining China's economic direction for 2018."
The Caixin-Markit gauge tracks smaller, private companies. The official indicator, which focuses primarily on larger, state-owned firms, slipped to 50.3 in February, National Bureau of Statistics data showed.
