BEIJING: China’s factory activity returned to growth in February, buoyed by expanding new orders, a private poll showed yesterday, although employment remained mired in contraction and inflationary pressures intensified.

       The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) rose to 50.4 in February, pulling away from a two-year low of 49.1 in the previous month. Economists in a Reuters poll had expected the index to edge up to 49.3.

       The 50 mark separates growth from contraction on a monthly basis.

       The improved reading was in line with the official PMI released earlier in the day, which showed the index at 50.2 last month, just a touch higher from 50.1 in January.

       A sub-index for new orders stood at 51.5, the highest since June 2021 and up significantly from 48.5 in the previous month, as factories reported stronger customer demand.

       Factory output also expanded to meet the new demand, although by a lesser margin at 50.1 from 48.4 the previous month. The survey showed the upturn was driven by manufacturers of consumer goods, as output fell at intermediate and investment goods producers.

       China’s economy started last year on a strong footing, rebounding from a pandemic-induced slump in 2020. Momentum started to flag in the summer, however, weighed down by debt problems in the property market and strict anti-virus measures that hit consumer confidence and spending.

       Policymakers have vowed to stabilise growth this year and all eyes are on the annual meeting of its top legislative body that begins on March 5, during which the government will unveil economic targets for the year and likely more stimulus measures.

       Despite some of the improvements in the latest Caixin PMI, factories continued to reduce their headcounts for the seventh straight month, highlighting the long-standing challenges facing the manufacturing sector from supply chain issues, sporadic Covid-19 outbreaks and weak consumer demand.

       “From January to February, several regions across China, including Jiangsu province and the Guangxi Zhuang and Inner Mongolia autonomous regions, suffered flare-ups of Covid-19.

       “Epidemic control measures were strengthened, which restricted transportation and sales of manufactured goods,” said Wang Zhe, senior economist at Caixin Insight Group, in a statement. — Reuters