Manufacturing output up but rate of growth slows in February

China PMI And Copper

China PMI And Copper

A reading above 50 signals expansion in the sector, while a reading below that points to contraction. Trade risksBoosted by government infrastructure spending, a resilient property market and unexpected strength in exports, China's manufacturing and industrial firms were a major driver behind the solid economic growth past year. Although rates of increase in output and new orders eased further from the highs reached before the turn of the year, the sector is still enjoying one of its best growth spells over the past 18 years, IHS Markit said.

"Output rose at the fastest pace in ten months, while the expansion in purchasing activity was the sharpest since the end of 2016 as firms reported efforts to build inventories".

The sub-index for production fell sharply by 2.8 points to 52.2, and for new orders it was down to 51.0 from 52.6 in January. Indeed, the continued rise in export orders and an uplift in new orders from the domestic market provided evidence that the foundations for continued growth were still buoyant.

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The PMI for the high-tech manufacturing registered 54 in February, compared to 53.2 for January, higher than the 50.3 for the whole manufacturing sector. Staffing numbers rose for the first time in almost one-and-a-half years in February.

The Investec Manufacturing PMI Ireland report recorded a headline figure of 56.2 last month, down from January's 57.6 reading. While firms associated the rise in output with improved economic conditions, the growth rate was marginal. However, the rate of increase in input buying volumes slowed to an eight-month low. The future output index, an indicator of business confidence among manufacturers, continued to decline from 60 in December to 58.7 in February. However, cost pressures intensified amid rupiah weakness. That said, sentiment dipped to the lowest since last June.

IHS Markit principal economist Bernard Aw said that while the influence of tax reforms was expected to fade in coming months, price pressures could become more entrenched on rising imported inflation, which will add to calls for the Bangko Sentral ng Pilipinas to raise interest rates. "This suggests that manufacturers are optimistic regarding the near-term prospects for client demand", Harker says.

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