China's Manufacturing Activity Set to Contract for Second Month in Feb: Reuters Poll

China's manufacturing activity is expected to contract for the second consecutive month in February, according to a Reuters poll of economists, as weak domestic demand and declining new export orders weigh on the sector. The poll, conducted between February 10 and 17, found that the median forecast for the official manufacturing purchasing managers' index (PMI) was 49.0, down from 50.1 in January. The Caixin/Markit PMI, which focuses more on small and mid-sized companies, was also expected to fall to 50.0 from 50.5 in January.

The slowdown in manufacturing activity comes amid a broader economic slowdown in China, with the country's GDP growth rate falling to 6.5 percent in the fourth quarter of 2023, the lowest level in nearly three years. The manufacturing sector has been particularly hard hit, with the official PMI falling below the 50-point mark that indicates expansion for the first time since February 2020 in December 2023.

The Reuters poll found that economists were concerned about the outlook for the manufacturing sector, with many citing weak domestic demand and declining new export orders as key challenges. The poll also found that manufacturers were cutting back on production and inventory levels, and that employment in the sector was declining.

The slowdown in manufacturing activity is likely to have significant implications for the broader economy, as the sector accounts for a significant share of China's GDP and employment. The government has been taking steps to support the manufacturing sector, including providing tax incentives and other forms of financial support. However, it remains to be seen whether these measures will be sufficient to stabilize the sector and prevent a deeper slowdown in the broader economy.




In conclusion, the expected contraction in China's manufacturing activity in February reflects the broader economic slowdown in the country and the challenges facing the manufacturing sector. While the government has taken steps to support the sector, it remains to be seen whether these measures will be sufficient to stabilize the sector and prevent a deeper slowdown in the broader economy. Investors and policymakers should closely monitor the situation and consider the potential implications for the broader economy and the global supply chain.