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China’s official manufacturing PMI rose to 51.0 in February, from 50.5 the previous month, above market expectations of 50.9.Manufacturing was pushed higher by heavy industries. New orders rose to 51.0, driven by new export orders, which jumped to 51.1 in February, from 46.9 in January.
Employment rose to 49.5, from 47.1 the previous month. This number was pushed by migrant workers returning to work after the Chinese New Year holiday.
In his latest report, Ting Lu, China economist for Bank of America-Merrill Lynch writes:
“Though this reading confirms our view of a continued softening of the Chinese economy, we should note that China’s monthly macro data in Jan and Feb are significantly distorted by the timing of the Chinese New Year (CNY) holiday. Consequently, the number of working days in Feb is significantly larger than that in Jan. As PMI is month-over-month comparison, seasonal adjustment could be critical in driving the results. In the past six years, the month after CNY always saw a rise of PMI readings. Therefore, PMI data in Jan and Feb should be taken with a grain of salt.”
In a positive sign however, PMI has stayed above 50 for three consecutive months showing resilience in China’s growth momentum.