©Reuters.
Investing.com — China's manufacturing activity contracted as expected in February, with little support from increased demand during the Lunar New Year holiday amid a widespread economic downturn.
Officials said it was 49.1 in February, according to data from the Office for National Statistics shown on Friday. This number was in line with expectations, but worsened from January's 49.2.
A reading below 50 indicates contraction, and the PMI has now been in contraction for five straight months.
China's manufacturing industry is one of the country's biggest drivers of economic growth and has been at the heart of the country's slow recovery after the coronavirus pandemic over the past year.
In addition to weak domestic demand, the sector is also suffering from weak export demand as the economic situation in China's largest export destination remains weak.
Still, the Lunar New Year holiday supported demand for services as travel and retail spending increased. China's rate increased to 51.4 in February, which was higher than expected.
Analyst expectations were 50.9, following January's 50.7.
This left China stable at 50.9 in February.
The data showed that some aspects of China's economy, particularly the service industry, benefited from increased consumer spending through February, particularly during the Lunar New Year holiday.
However, it remains to be seen whether this growth will be sustained in the coming months, especially as other aspects of China's economy remain under significant pressure, particularly manufacturing.
The Chinese government has launched a number of financial stimulus measures in recent months to boost growth. But support for the economy has so far been limited, and investors are now calling for more targeted fiscal policy.
