China Caixin manufacturing PMI continues to contract in February

The Caixin/Markit Manufacturing purchasing managers’ index (PMI) for February came in at 49.9 points, rising from the 48.3 points in January, but was still below the 50-mark which separates contraction and expansion.

A factory in China Source: Bloomberg

A private survey on China’s manufacturing sector showed factory activity among smaller Chinese continuing to contract for the third-straight-month in February. However, some signs of recovery could be in sight as last month’s factory activity was above economist’s expectations and improved from the previous month’s decline.

The Caixin/Markit Manufacturing purchasing managers’ index (PMI) for February came in at 49.9 points, rising from the 48.3 points in January. Economists in a Reuters poll had expected the sector to fall below the 50-mark that separates expansion and contraction, at a reading of 48.5 points.

New orders moved into expansionary territory in February at 50.2 points, compared with January’s 47.3 points and output prices grew for the first time in four months. However, new export orders fell last month after a brief rebound in January and purchasing activity fell for the second consecutive month.

The private sector survey results were less pessimistic compared to the official PMI numbers released on Wednesday which showed China’s manufacturing sector worsening from the previous month to contract for the third straight month in February, falling below analysts’ expectations.

China has been broadly affected by the weakened trade due to the United States (US)-Sino trade conflict while it copes with slowing domestic demand.

Final trade deal between the US and China could surface this month

US officials are reported to be preparing a final trade deal both leaders can sign in weeks and the US is targeting a summit between the two leaders as soon as mid-March, people familiar with the matter told Bloomberg on Friday.

The US has been clearing hurdles in the negotiations to put an end to the trade war between both countries, while trying to barter for terms that work to benefit American firms.

On Sunday, US president Donald Trump said the US will delay the increase in the remaining US$200 billion worth of US tariffs on Chinese imports scheduled for March 1st. Markets had rallied with the positive developments.

China’s growth for last year slipped to the lowest annual rate since the 1990s while its 2018 fourth quarter growth slowed to the weakest since the global financial crisis, as domestic and foreign demand slackened amid the country’s trade conflict with the US.

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