China Caixin Manufacturing PMI (February): 51.7 (vs. expected 50.8)

China’s manufacturing sector expanded for the seventh month in a row, evidence that the world’s second largest economy is stabilizing amid an uncertain global outlook.

German manufacturing posted another strong performance in February, hitting a 69-month high, with notable strength seen in new orders, exports and purchasing, according to the latest IHS Markit PMI data.

The Chinese economy started the year strongly, with key economic indicators, including those for trade and inflation, all rebounding. Companies are reporting stronger demand in both home and export markets, with the weakened euro providing an accompanying tailwind to help drive sales.

The pound’s weakness, however, saw purchase prices remain close to the highest level on record, albeit input cost inflation pressure eased slightly from January’s record high. The index for medium-sized firms fell 0.3 percentage points to 50.5 while that for smaller manufacturers was unchanged at 46.4.

While the February Manufacturing PMI figures of 53.3 and 51.7 in Japan and China clocked in lower than the 55.4 recorded for the Eurozone, the underlying economies continued to improved compared to several months ago.

Manufacturers raised production for the first time in 23 months, as levels of outstanding business accumulated at the quickest pace in the series history. “The rate of backlog accumulation was the fastest since last October”, said the report.

Manufacturing in India continued to grow in the month of February as PMI manufacturing index stood at 50.7, up from 50.4.

“However, with growth rates well below-par, the sector still has many areas to develop before it can fire on all cylinders”, Ms. Lima said. The period since 2002 has been particularly hard for Australia’s manufacturers in the face of the phenomenal expansion of China’s manufacturing sector, extended periods of domestic currency strength and volatility in global confidence, activity and trade.