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© Reuters. A worker pours molten iron into a mold of a marine engine component manufacturing plant in Huaian, Jiangsu
By Yawen Chen and Ryan Woo
BEIJING (Reuters) – Factory activity in China has contracted for a third consecutive month in February, but at a slower pace, helped by improvements in domestic manufacturing, revealed a private investigation on Friday.
The readings – closely watched by investors as an alternative to official data and more focused on small businesses – have provided new evidence of China's economy and suggest that the US-led trade war China will continue to weigh on exports, the prospects for a trade agreement remains uncertain.
The Caixin / Markit Manufacturing Sector Purchasing Managers' Index for the month of February reached 49.9 in January, going from 48.3 to 49.9, remaining below the neutral mark of 50 marks since the monthly contraction. for the third month.
Economists polled by Reuters had predicted a more marked deterioration for February of 48.5.
The figures were more optimistic than Thursday's official survey – which showed that the business climate in this sector had fallen to its lowest level in three years and that export orders had fallen to their lowest levels. low level for a decade – indicating a slight improvement in domestic demand under the effect of a political revival. started at the end of last year.
"The domestic manufacturing demand has improved significantly and foreign demand has not deteriorated as quickly as last year," said Zhengsheng Zhong, director of the group's macroeconomic analysis. CEBM, in a comment accompanying the publication of the data.
The total number of new orders fell slightly in February to 50.2 in expansionary territory, against 47.3 in January and after two months of contraction. Production prices rose for the first time in four months.
Factory production also increased slightly after being contracted the previous month.
PMI data stronger than expected gave a boost to Australian and New Zealand dollars.
Zhong said the recovery was due to stronger domestic demand, thanks to the anticipated issuance of special-purpose bonds of local governments, which have been accelerated by the Chinese authorities to boost investment in infrastructure , a more favorable monetary policy and a recovery in industrial sector prices. goods.
However, new export orders declined in February after a brief rebound the previous month and buying activity declined for the second month in a row, likely due to continued weak demand.
Chinese manufacturers reported a deterioration in supplier performance in February. Factories also continued to cut costs by laying off staff for a 64th consecutive month, at a faster pace than the previous month.
"The pressure on the capital turnover of manufacturers has once again become evident, which may indicate that the financial environment has not eased as expected and that credit expansion has not eased. still significant effect, "added Zhong.
The degree of corporate optimism also declined from the eight-month high in January. The companies surveyed remain concerned about the US-China trade dispute, relatively moderate demand conditions and restrictive domestic policies, which could weigh more heavily on production, the statement said.
US President Donald Trump warned Thursday that he could give up a trade deal with China if that were not enough, even as his economic advisers were touting "fantastic" progress on the road to an agreement putting end to the dispute with the Asian country.
"The result is that it's probably too early to call the bottom of the current economic cycle," wrote Julian Evans-Pritchard, chief economist of Capital Economics for China, in a post-survey note. "Indeed, we expect that growth will continue to be under pressure until the middle of this year."
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