China: Post-holiday rebound in PMIs provided little relief as more tariff looms – UOB Group

Both China’s official manufacturing and non-manufacturing PMIs picked up in Feb as activities normalized after the Lunar New Year holiday (28 January – 4 February). The official manufacturing PMI returned to expansion (indicated by a reading above 50) while non-manufacturing PMI rose at a faster pace, UOB Group’s economist Ho Woei Chen notes.

February PMIs in expansion but underlying indexes suggest less rosy outlook

"Both China’s official manufacturing and non-manufacturing PMIs picked up in Feb as activities normalized after the Lunar New Year holiday."

"The details showed that the outlook was less rosy than the headline numbers suggested. The rebound in the official manufacturing PMI was led by the large enterprises while outlook for the medium and small sized enterprises contracted at a sharper pace than in Jan. Furthermore, the gain in the non-manufacturing PMI was due to a rebound in the construction index but the services index moderated."

"The near-term concerns center on the escalation of trade frictions with US given increasing headwinds to China’s export engine this year. Markets will also look to the annual 'two sessions' this week for additional stimulus measures to mitigate the downside risks to Chinese economy, particularly on the fiscal side."