After three years of turbulence under the Covid pandemic, China's leaders are expected to lay out economic goals to get growth back on track, restore confidence and avoid a build-up of financial risks. - Bloomberg
BEIJING (Bloomberg): China’s economy is showing signs of a stronger rebound after Covid restrictions were abandoned, with manufacturing posting its biggest improvement in more than a decade, services activity climbing and the housing market stabilising.
The manufacturing purchasing managers’ index rose to 52.6 last month, the National Bureau of Statistics said Wednesday (March 1), the highest reading since April 2012. A non-manufacturing gauge measuring activity in both the services and construction sectors improved to 56.3. Both indexes beat economists’ expectations.
The PMIs provide the first comprehensive data of the economy’s recovery after Covid restrictions were dropped late last year, infection waves began easing and businesses returned to normal after the Lunar New Year holidays. The figures add to other signs of a rebound in the economy and put policymakers in a good position ahead of next week’s National People’s Congress, where a new growth target will be disclosed.
While there were "significant seasonal and event factors” influencing the PMI figures, the "overall trend still points to a solid recovery at the beginning of 2023,” said Zhou Hao, chief economist at Guotai Junan International.
"The decent PMI readings provide a positive note for the upcoming National People’s Congress,” with the government expected to roll out further supportive policies to cement the recovery, he said.
The data buoyed stocks and fueled a rally in commodities. The Hang Seng China Enterprises Index, which tracks Chinese companies listed in Hong Kong, rose 3%, while the offshore yuan gained as much as 0.3%. West Texas Intermediate oil swung from an earlier decline and was up 0.5% as of 11:09am in Singapore. Copper rose 0.5% on the London Metal Exchange, while aluminum and iron ore also climbed.
The improving factory data suggests the recovery is becoming more balanced as well, after the sector was initially lagging because of a slump in exports, weak business confidence and Lunar New Year.
Economists continue to caution though that global demand remains weak and exports will likely contract this year.
