China’s Composite PMI Hits 3-Month High in February, Reflecting Economic Resilience

China’s economy showed signs of steady recovery in February, as the Caixin/S&P Global Composite Purchasing Managers’ Index (PMI) climbed to 51.5, its highest level in three months. This marked the 16th consecutive month of expansion in private-sector activity.

The data, released Tuesday, highlights a modest but consistent improvement across both the manufacturing and services sectors. This growth is driven by post-holiday consumption and technological advancements.

The services PMI rose to 51.4 from January’s 51.0, supported by robust demand during the Chinese New Year holiday and a rebound in export orders. Meanwhile, the manufacturing PMI increased to 50.8, up from 50.1 in January, reaching a three-month high.

Both indices surpassed market expectations, signaling stronger-than-anticipated momentum across key sectors. February’s gains were underpinned by improved new orders and production levels.

The manufacturing sector saw new orders rise to 51.1 and production jump to 52.5, both hitting their highest levels in nearly a year. Export orders also rebounded after two months of contraction, reflecting recovering external demand despite ongoing trade tensions with the United States.

However, challenges remain. Employment contracted for the sixth consecutive month in manufacturing as companies prioritized cost control over workforce expansion. The services sector showed slight improvement in hiring, but overall employment pressures persist across industries.

China’s Economic Challenges

Additionally, household income growth remains weak, constraining domestic consumption—a critical pillar for sustained economic recovery. Price dynamics also painted a mixed picture.

Input costs rose marginally due to higher raw material prices like copper and chemicals, while output prices fell as businesses offered discounts to stimulate demand. This trend reflects subdued pricing power across sectors.

Economists view March as a critical month for policymakers as they address these structural challenges during the National People’s Congress (NPC). Analysts expect further measures to boost household income and stabilize employment.

At the same time, they anticipate continued support for small and medium-sized enterprises. Despite uncertainties, optimism among businesses grew in February, with many citing stronger demand and planned sales initiatives for the year ahead.

While China’s economy faces headwinds from global trade risks and domestic constraints, February’s PMI figures suggest resilience. This offers cautious optimism for the months ahead.