A closely watched index of manufacturing activity in China edged up in February, an early sign that the economy may have seen the worst of the downturn.
The official purchasing managers' index released by the Chinese authorities Wednesday rose to 49 in February, from 45.3 the previous month and continuing its improvement from a low of 38.8 in November. A reading below 50 indicates contraction, so the February outcome does not yet represent recovery.
Steven Zhang and Qing Wang, China economists at Morgan Stanley in Hong Kong. cautioned that the improvement in February may have been in part due to a technical rebound and a gradual normalization in trade financing. "It is unlikely indicative of an inflection point beyond which a sustainable recovery in the Chinese economy can be achieved," they said in a report Wednesday. "We in fact expect such a recovery to materialize in the second half of instead," they said in a note on Wednesday.
Still, the reading – and a similar tentative improvement in an index compiled and released by the brokerage CLSA on Monday – underline the relative resilience of the Chinese economy, where the authorities were quick last year to announce an ambitious stimulus package.
Millions of jobs have been lost in China as producers catering to the export market have been hit by evaporating demand from overseas. And the economy, which powered ahead at double-digit growth rates for half a decade before the financial crisis in the United States escalated into an economic slump, has slowed sharply; many economists believe China may see growth of only 5 or 6 percent this year, markedly below the 8 percent the government is projecting.
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