In February, the prosperity of China’s manufacturing industry slightly improved, and the Caixin China Manufacturing Purchasing Managers Index (PMI) rebounded to the expansion range, slightly expanding.
The Caixin China Manufacturing PMI for February 2022, released on March 1, recorded 50.4, an increase of 1.3 percentage points from January, indicating that the overall prosperity of the manufacturing industry has resumed expansion, but the improvement rate is still slightly lower than the long-term average.
This trend is consistent with the manufacturing PMI of the National Bureau of Statistics. The manufacturing PMI for February released by the National Bureau of Statistics recorded 50.2, a slight increase of 0.1 percentage points, and has been in the expansion range for four consecutive months.
From the various sub indices of Caixin China’s manufacturing PMI, it can be seen that the overall supply and demand of the manufacturing industry have improved. The production index and new order index both returned to the expansion range in February, with moderate growth; The improvement in demand is more significant, with the new order index reaching an eight month high. Many surveyed companies have reported that the market situation has improved relatively, customer demand has increased, and output has resumed growth.
Affected by the deterioration of overseas epidemics and transportation disruptions, external demand remains weak, and the new export order index has been in a contraction range for seven consecutive months, but the decline has narrowed compared to the previous month.
Despite the improvement in market supply and demand, companies are more cautious in their use of labor, and the employment index has been in a contraction range for seven consecutive months, with a narrower decline. According to the survey, sales were relatively weak, coupled with personnel voluntarily leaving without filling vacancies, resulting in a decrease in employment.

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With the increase in production demand, the purchasing quantity index of manufacturing enterprises rebounded in February, but due to the constraints of high raw material prices, the purchasing volume only slightly increased. Finished product inventory and procurement inventory continue to decline, and the decline has expanded compared to the previous month. According to reports, due to the increase in procurement costs, many survey companies have increased the use of existing inventory in production and delivery.
Due to an increase in new orders and a shortage of staff, the backlog of work has rebounded. Affected by epidemic prevention and control policies, the supplier supply time index continues to be in a contraction range, and the supply time is further extended.
In February, the purchasing price index and factory price index of manufacturing enterprises increased significantly, both reaching new highs since November 2021. The survey shows that the main reasons for the price increase on the cost and fee sides are the high prices of some raw materials and the increase in transportation costs.
Entrepreneurs remain optimistic about the future, and the manufacturing production and operation expectation index has risen to a new high in the past eight months, higher than the long-term average. According to the survey of enterprise expectations, the recovery after the epidemic in the next year and the strengthening of global demand will boost economic growth.
According to Wang Zhe, Senior Economist at Caixin Think Tank, in February 2022, the manufacturing industry’s momentum has rebounded, supply has recovered, and demand has improved more significantly, enhancing the optimistic expectations of entrepreneurs. However, the job market remains sluggish, and inflation cannot be ignored. Recently, there has been an outbreak in some areas, and the strengthening of relevant prevention and control measures has constrained the transportation and sales links. Under the triple pressure of demand contraction, supply shock, and weakened expectations, the Chinese economy still faces significant downward pressure, and the foundation for manufacturing recovery is still not solid. Stable growth remains a top priority. At the policy level, it is necessary to strengthen employment priority policies, strengthen structural support for small and medium-sized enterprises, and effectively reduce the tax burden and financing costs of enterprises; At the same time, we should continue to do a good job in ensuring the supply and stable prices of bulk commodities, alleviate the pressure of rising costs for middle and downstream enterprises, and maintain the stability of market entities