The S&P Global PMI composite index for China rose from 51.1 in January to 54.2 in February, indicating that China's economy expanded for the second consecutive month and at the fastest pace in eight months. The business activity index for China's services sector, also published today, rose from 52.9 in January to 55.0 in February, while the manufacturing PMI survey, released earlier in the week, also showed expansion for the first time in seven months, with its headline index rising from 49.2 to 51.5.

These improvements are broadly in line with official CFLP PMI survey data which also showed stronger conditions in both the manufacturing and the non-manufacturing sectors in February. These PMI surveys indicate that improvements in public health conditions have prompted a similar improvement in economic conditions.

Respondents to the service sector survey reported bigger increases in output and new orders in February and the biggest increase in new export orders in nearly four years. Payrolls were reported to have increased for the first time in four months and at the sharpest pace since November 2020, with the survey's measure of confidence easing from a multi-year high in January but remaining very strong. Respondents also reported subdued increases in both input costs and selling prices.

PMI surveys are one of the few Chinese economic indicators that show January and February data separately. Most official economic data for China are not reported separately for January and February but are instead combined and reported together in order to remove distortions caused by changes in the timing of lunar new year holidays each year. Most official activity data for the first two months of the year will be reported mid-March.

Caixin's services PMI in January, at 52.9, moved back into plus-50 expansion for the first time since August last year. February's consensus is a sizable gain to 54.3.

The S&P China Services PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 private service sector companies. The panel has been carefully selected to accurately replicate the true structure of the services economy.

The S&P China Composite PMI is a weighted average of the Manufacturing Output Index and the Services Business Activity Index, and is based on original survey data collected from a representative panel of over 800 companies based in the Chinese manufacturing and service sectors.

The PMIs have developed an outstanding reputation for providing the most up-to-date possible indication of what is really happening in the private sector economy by tracking variables such as sales, employment, inventories and prices. The indexes are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries use the data to help make interest rate decisions. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.