China’s manufacturing sector expanded for the first time in four months, beating market expectations as an unwinding of Covid-19 restrictions buoyed activity in the world’s second-largest economy.
The official manufacturing sector purchasing managers’ index came in at 50.1 for January, up from 47 in December and just above the 50-point threshold that separates an expansion in activity from contraction. Analysts had been expecting a reading of 49.8, according to a Reuters poll.
China abruptly abandoned its zero-Covid policy, which had throttled economic growth for much of the past three years, in December.
In January, the country’s transport ministry forecast that Chinese citizens would make 2.1 billion trips as they traveled from the cities to their home provinces for the lunar new year holiday. The unwinding of virus restrictions has raised hopes that an unleashing of pent up savings will boost consumption and buoy the country’s economy.
The IMF this month signaled it would raise its global economic forecasts on the back of China’s reopening.
The PMI rise was mostly driven by an increase in the sub-index for new orders, signaling a recovery in demand for manufactured goods.
On Tuesday, China’s non-manufacturing PMI, which covers services and sectors such as forestry and agriculture, came in at 54.4, ahead of expectations for a reading of 52 and well above last month’s reading of 41.6.