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BEIJING, Feb 28 (Reuters) – Chinese factory activity likely contracted in February due to a slowdown in production following the Lunar New Year holidays and the Winter Olympics, with Beijing expected to unveil more stimulus measures at a parliamentary meeting later this week to support the economy.
The official purchasing managers’ index (PMI) for the manufacturing sector is expected to fall to 49.9 in February, its lowest level in four months, from 50.1 in January, according to median forecasts from 35 economists polled by Reuters on Monday. . A reading below 50 points indicates a contraction from the previous month.
“In addition to the impact of the seasonality of Lunar New Year calendar changes, production restrictions during the Winter Olympics and still subdued activity in the real estate sector likely weighed on demand upstream,” the analysts said. Morgan Stanley analysts in a note Friday. They expect the National Bureau of Statistics’ manufacturing PMI to have slipped to 49.6.
The week-long Lunar New Year holiday began in late January, and the Beijing Winter Olympics were held from Feb. 4-20.
However, Capital Economics expects an upside surprise from the data, citing COVID-19 restrictions eased as outbreaks were contained.
“Early indicators suggest conditions improved in February. Most localized restrictions on industrial areas and port cities were lifted thanks to fewer outbreaks this month compared to January.”
China’s economy got off to a solid start last year, rebounding from a pandemic-induced slump the previous year. However, momentum began to falter over the summer, weighed down by debt problems in the housing market and stringent anti-virus measures that hurt consumer confidence and spending.
Policymakers have vowed to stabilize growth this year and all eyes are on the annual meeting of its top legislature which begins March 5 when the government will unveil economic targets for the year and likely others. stimulus measures.
New bank lending hit a record high in January, according to the latest data, after the central bank cut benchmark lending rates to revive the economy. Read more
The official PMI, which largely focuses on large companies and public companies, and its sister survey for the services sector, will be released on Tuesday.
Caixin’s private manufacturing PMI will also be released on the same day. Analysts expect the stock’s reading to rise slightly to 49.3 from 49.1 previously.
Goldman Sachs analysts said seasonality tended to generate a slight upward bias on Caixin’s February manufacturing PMI.
Reporting by Stella Qiu and Ryan Woo; survey by Devayani Sathyan and Jing Wang; Editing by Jacqueline Wong
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