China’s official manufacturing gauge fell the most in five years in February as Spring Festival holiday closures curbed output and export orders declined.
- The manufacturing purchasing managers index fell to 50.3 from 51.3 the prior month, missing the 51.1 estimate in Bloomberg’s economist survey
- The non-manufacturing PMI slipped to 54.4 from 55.3 the prior month, the statistics bureau said Wednesday
- The composite index covering both services and manufacturing stood at 52.9, versus 54.6 in January. Numbers above 50 indicate improving conditions
Top officials are gathering this week to potentially reshape the government, including top economic roles, and repeal presidential term limits to allow Xi Jinping to rule indefinitely. Policy makers also have been intensifying overhauls to address pollution and debt and are likely to unveil new economic objectives next week at an annual legislative meeting.
China’s week-long Lunar New Year holiday often distorts data for January and February as the accompanying factory shutdowns and office closures fall at different times each year. This year’s national holiday was from Feb. 15-21.
Other gauges showed:
- New export orders fell to 49, declining for a second month
- Manufacturing output dropped to 50.7 from 53.5
- Factory employment declined for a fourth month, to 48.1
- Steel industry PMI fell to 49.5 from 50.9 as output and new orders both deteriorated
“The holiday effect is definitely a key reason,” said Iris Pang, an economist at ING Groep NV in Hong Kong. “Combining the first two months’ data, it’s still a solid start to the year. Looking ahead, I think the overcapacity cuts will still be a major theme this year, only that the focus might be shifted to sectors such as cement and glass from steel and coal in 2017.”
