Economic Buzz: China?s manufacturing growth hits five-year high as demand and exports surge

China?s manufacturing sector showed strong improvement in February, with business conditions expanding at the fastest pace in more than five years. The headline Purchasing Managers? Index (PMI) rose to 52.1 from 50.3 in January, remaining above the 50 mark for the third straight month. A reading above 50 signals growth in the sector.

New orders increased for the ninth month in a row, with growth reaching its strongest level since late 2020. Export demand was particularly strong, rising at the quickest pace in over five years. Higher demand encouraged factories to raise production, which expanded at its fastest rate since mid-2024.

Manufacturers also increased their purchasing activity to meet rising demand. Input buying grew at the sharpest rate since late 2024, while supplier delivery times improved slightly. Stocks of raw materials increased, and finished goods inventories stabilised after recent declines.

Although backlogs of work rose in February, hiring remained cautious. Employment increased only slightly for the second consecutive month.

Cost pressures intensified as raw material prices, especially metals, moved higher. In response, companies lifted their selling prices for the second month in a row.

Overall, manufacturers expressed greater confidence about the year ahead, supported by stronger demand, new production lines, and improved capacity and efficiency.

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