China’s factory activity improves in February for fourth month running  | Manufacturing Asia
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China’s factory activity improves in February for fourth month running 

Restructuring and cost considerations weigh on hiring plans.

The overall health of China’s manufacturing sector improved for the fourth straight month in January as production and new orders continued to rise, according to a closely watched industry survey.

The headline Caixin/S&P China general manufacturing purchasing managers’ index (PMI) inched up to 50.9 last month from 50.8 in January, signaling sustained marginal growth in the sector as the index stayed above the 50 neutral mark, which separates expansion from contraction.

Last month also marked the strongest showing since August 2023, in large part due to the robust output growth. Local manufacturers traced the uptick to improving market conditions as well as greater new order volumes from both domestic clients and in their export businesses.

The survey revealed that higher production pushed manufacturers to ramp up their purchasing activity last month at a rate not seen since March 2023. Stocks of finished orders also declined for the first time since June 2023 as companies fulfill orders.

READ MORE: China’s factory activity improves for three months in a row

Despite improving business conditions, job shedding continued in Chinese factories as restructuring efforts and cost considerations weighed on hiring plans.

Manufacturers grew more optimistic for the coming year ahead on the expectations of “firmer global economic conditions, new product lines and investment in new equipment. 

“[The fourth straight months of expansion marked] the first time… since the second half of 2021, indicating an overall economic recovery,” said Wang Zhe, senior economist at Caixin Insight Group. “However, the economy still faces headwinds with unfavorable factors and uncertainties remaining prevalent.”

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