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China’s February factory activity may shrink amid the holidays, the Olympics

FILE PHOTO: Employees work on the production line during an organized media tour of the Schneider Electric factory in Beijing
FILE PHOTO: Employees work on the production line during an organized media tour of the Schneider Electric plant in Beijing, China February 17, 2022. REUTERS / Florence Lo

February 28, 2022

BEIJING (Reuters) – China’s factory activity could decline in February on slower production following the Lunar New Year holidays and the Winter Olympics, with Beijing expected to announce more… stimulus measures at the congressional meeting this weekend to support the economy.

The official Manufacturing Purchasing Managers’ Index (PMI) is expected to fall to 49.9 in February, a four-month low, from 50.1 in January, according to a 35-year average forecast. economists polled by Reuters on Monday. A reading below the 50 mark indicates a decline from the previous month.

“Aside from the seasonal impact of the time change on the Lunar New Year, production restrictions during the Winter Olympics and remaining subdued real estate activity are likely,” said analysts at Morgan Stanley. will affect upstream demand,” analysts at Morgan Stanley said in a Friday note. They predict the National Bureau of Statistics manufacturing PMI has fallen to 49.6.

The week-long Lunar New Year holiday begins in late January, and the Beijing Winter Olympics run from February 4 to 20.

However, Capital Economics expects some surprises to the data, citing COVID-19 restrictions being eased as outbreaks have been contained.

“Initial indicators show that conditions improved in February. Most of the localized restrictions on industrial zones and port cities have been lifted thanks to fewer outbreaks this month than in January.”

China’s economy started last year on a strong footing, recovering from a pandemic-induced recession the previous year. However, the upside momentum began to flare in the summer, weighed down by debt problems in the property market and stringent anti-virus measures affecting consumer confidence and spending.

Policymakers have vowed to stabilize growth this year, and all eyes are on the top legislature’s annual meeting starting March 5, during which the government will announce announced economic targets for the year and most likely stimulus measures.

The latest data showed that bank lending hit a record high in January, after the central bank lowered its benchmark lending rate to kickstart the economy.

The official PMI, which mainly focuses on large and state-owned companies, and its sister survey for the services sector, will be released on Tuesday.

The private Caixin manufacturing PMI will also be released on the same day. Analysts expect headline reading to increase slightly to 49.3 from 49.1 previously.

Analysts at Goldman Sachs said that seasonality tends to provide a small bullish bias for the Caixin Manufacturing PMI in February.

(Reporting by Stella Qiu and Ryan Woo; poll by Devayani Sathyan and Jing Wang; Editing by Jacqueline Wong)

https://www.oann.com/chinas-february-factory-activity-likely-shrank-amid-holidays-olympics/?utm_source=rss&utm_medium=rss&utm_campaign=chinas-february-factory-activity-likely-shrank-amid-holidays-olympics China’s February factory activity may shrink amid the holidays, the Olympics

Caroline Bleakley

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