Thought for the day

Chinese Economy Roars Back In February

The Sales Managers Survey shows China recovering from Covid much faster than expected


 
Last updated: 3 July 2024
 
The February Sales Managers Survey shows a very rapid recovery of economic activity in China. Although Covid related problems haven't entirely vanished (45% of Chinese companies surveyed in February said they remeained negatively impacted by Covid in one way or another) the percentage fell sharply from 55% in January.

Following the big 4 point increase in Manufacturing activity in January, February data shows an even bigger jump in Services activity (together with a further increase in Manufacturing). The February Sales Growth index recorded a record near 5 point increase from 50.8 to 55.7, a 17 month high. The All Sector Sales Growth Index is now up at 54.6, a 16 month high.

China Services Sales Growth Index
Diffusion Index. (50 = 'No Growth')
Chinese Economy Roars Back In February

The data suggests there is little doubt that the Chinese economy isn't yet back to pre Covid normality, but both Manufacturing and Services sectors are experiencing rapidly rising activity levels. Although early days to be absolutely sure of the absolute size of this recovery, the February data does provide strong evidence that China is recovering from Covid much faster than expected by most analysts.

In conclusion, the rapid changes made in Covid policy from early December by the Chinese Government do appear to be releasing a wave of long suppressed energy, despite the continuing supply problems associated with the long lock down period.
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