By Ellen Zhang and Ryan Woo
BEIJING, March 4 (Reuters) - China's factory activity in February expanded at the fastest pace since December 2020, driven by robust demand that helped lift manufacturers' confidence, a private-sector survey showed on Wednesday.
The RatingDog China General Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 52.1 in February from 50.3 in January, easily beating analysts' forecasts of 50.2 and marking the highest level in over five years. The 50-mark
separates growth from contraction.
The result contrasted with an official survey released earlier in the day that showed factory activity shrank for the second consecutive month in February.
Analysts say differences in survey coverage and respondent profiles often contribute to divergent readings.
Demand for Chinese manufactured goods strengthened in February, the private survey showed, with the volume of new orders rising for the ninth successive month and at the quickest rate since December 2020. That lifted output growth to the strongest recorded since June 2024.
Overseas demand picked up notably, with new export orders rising at the most pronounced pace since September 2020.
An outdoor furniture seller based in eastern China said on the condition of anonymity that due to improvement in supply chain and overseas warehouses, their orders rose 30%-40% in January from a year earlier, while February orders kept growing.
The manufacturing PMI is expected to maintain a moderate expansionary trend in the short term, said Yao Yu, founder of RatingDog.
"Looking ahead, the sustainability of this momentum depends on persistent demand and whether confidence translates into more active hiring and investment."
Economists say China will benefit from the U.S. Supreme Court ruling against President Donald Trump's emergency tariffs that were imposed last year, as the narrowing of the tariff gap with other countries can give it some advantages.
The U.S. Trade Representative's office said on Monday the country will seek to manage bilateral trade with China for better balance and fairness and monitor Beijing's compliance with a trade truce reached last year.
Chinese manufacturers were more optimistic about their future output in February, with overall sentiment the highest in 11 months, the S&P survey showed.
Although backlogs rose in February when many factories send workers back home for the Chinese New Year, manufacturers remained cautious in hiring. Employment rose only fractionally for the second month, but this marked the first consecutive increase since mid-2021.
Stronger demand conditions led manufacturers to step up their purchasing operations, with cost pressures intensifying. The overall rate of input price inflation accelerated to the highest since June 2022, with metal prices highlighted by respondents in particular.
Manufacturers hence raised their output prices for the second month and the rate of charge inflation picked up to a 15-month high.
China will unveil key economic targets for 2026 at the annual parliamentary meeting which will kick off on Thursday. Markets are also watching the release of the next Five-YearPlan report covering the country's economic development, tech innovation and green transition directions.
(Editing by Shri Navaratnam)
