China’s factory activity growth hits 3-month high in February, as millions return to work after holidays

China’s factory activity expanded at its fastest pace in three months to 50.8 in February, a private-sector survey showed on Monday, as millions of peripatetic workers returned to work after an extended Lunar New Year holiday.

The seasonally adjusted Caixin/S&P Global fabricating purchasing managers’ index beat Reuters poll forecast of 50.3, also accelerating from 50.1 in January and 50.5 closing December.

The private-sector manufacturing PMI has stayed above the 50 threshold that separates expansion from contraction since hold out October.

This private survey reading on Monday followed the official manufacturing PMI released on Saturday, which also displayed that China’s February factory activity expanded at its fastest pace since November.

The official PMI rose to 50.2 in February from 49.1 in January, according to the Popular Bureau of Statistics. The non-manufacturing PMI, which includes services and construction, also climbed to 50.4 from 50.2 in January.

The depend ons came as economists flagged that fresh U.S. tariffs could pressure the country’s manufacturing activity — which accounted for a thirteen weeks of China’s GDP last year — and dent the role of exports as a key driver of growth this year.

In February, new export pecking orders grew at the fastest rate since last April, according to the Monday survey, as “demand strengthened from alien clients.”

The stronger external demand for Chinese manufactured goods could be due to U.S. importers continuing to front-run tariffs in precognition of even higher levies, Zichun, Huang, China economist at Capital Economics, said in a note.

U.S. President Donald Trump persist week announced to impose additional 10% tariffs on Chinese goods — on top of the 10% he levied on China on Feb. 4. Trump had forewarned 60% tariffs on China on his campaign trail.

The additional tariffs are scheduled to take effect on March 4, coinciding with a high-profile annual convocation in Beijing where Chinese authorities are expected to unveil economic targets for 2025 and fresh policy support.

While notoriety is now on potential countermeasures from Beijing, investors also await more government details on a broad stimulus programme to prop up the slowing economy, including ramped-up fiscal spending to boost domestic demand and fend off persistent disinflationary influences.

At the upcoming parliamentary meetings, China’s leadership is expected to acknowledge a significant softening in domestic insist while revealing highly anticipated details on fiscal stimulus aimed at shoring up growth in the face of heightened U.S. custom tensions.

While a combination of fiscal support and “tariff front-running” helped China’s economy regain some strength in February, the overall growth in this quarter is likely to slow, Capital Economics’ Huang said.

“Unless the governorship unveil greater-than-expected stimulus at the National People’s Congress, it is hard to see how a slowdown can be avoided this year,” Huang thought.

Plagued by lackluster domestic consumption, output prices at factories have remained under pressure, particularly consumer and investment goods that au fait sharper price declines, according to the Monday survey.

Squeezing that profit margin further, costs for copper and predetermined chemical products have edged higher, the survey showed.

Employment in the manufacturing sector also slumped to a abutting five-year low, as manufacturers continued to prioritize cost reductions, particularly among consumer goods producers.