China’s economy is showing signs of a rebound stronger after restrictions are droppeds imposed to contain the covid. Manufacturing activity posted its biggest improvement in more than a decade, while service activity grew and the housing market shows signs of consistency.
The manufacturing purchasing managers’ indexrose to 52.6 last monththe national statistics office said on Wednesday, the highest reading since April 2012. A non-manufacturing indicator that measures activity in the services and construction sectors improved to 56.3. Both indices beat economists’ expectations.
The PMI figure provides the first complete data on the recovery of the economy After the restrictions imposed to contain the covid were lifted at the end of last year, the waves of infections began to subside and businesses returned to normal after the holidays of the Lunar New Year.
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The figures add to other signs of a rebound in the economy and put politicians in a good position ahead of the National People’s Congresswhere a new growth target would be announced.
Although there were “significant seasonal and event factors” influencing the PMI numbers, the “overall trend still points to a robust recovery in early 2023,” said Zhou Hao, chief economist at Guotai Junan International. “Decent PMI readings provided a positive note for the upcoming National People’s Assembly” and the government is expected to implement more support policies to consolidate the recovery, he said.
Data lifted stocks and fueled rally in commodities.
While investors have focused on signs of recovery on Wednesday, next week’s National People’s Congress is proving a source of uncertainty. President Xi Jinping is attempting to consolidate Communist Party control over the world’s second-largest economy and tHas plans to make radical changes in the country’s bureaucracy and have more influence within private companies, including reforms for the financial sector.
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Economists also warned that, although the improvement in factory data suggests that the recovery It’s becoming more balanced, there are still headwinds, as global demand remains weak and exports are likely to contract this year.
What Bloomberg Economics Says
“Given the strong PMI readings for January, the data shows that the recovery is outpacing the rebound at a comparable stage in early 2020, after the national lockdown was lifted.
Looking ahead, it will be difficult to keep up with this fast pace, as global growth is slowing and pent-up demand after covid reopening it will probably fade away. Still, with a shift in policy towards growth support, the recovery should maintain momentum in the second quarter.”
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