(Yicai Global) March 2 -- China’s manufacturing activity picked up a little last month, recovering from a 23-month low in January to return to positive territory, a widely watched private index showed.

The Caixin purchasing managers’ index for manufacturing was 50.4 in February, up from 49.1 in January, according to data published today by financial media group Caixin. A mark above 50 indicates expansion.

The gain was consistent with the official manufacturing PMI published by the National Bureau of Statistics yesterday. It was 50.2 last month, edging up from 50.1 in January and remaining in positive territory for a fourth consecutive month.

China’s economy is still facing relatively great downward pressure, the foundation of manufacturing recovery is still not solid, and stabilizing growth remains the top priority, said Wang Zhe, senior economist at Caixin’s think tank.

Judging by the Caixin sub-indexes, supply and demand in the manufacturing sector have improved as a whole. Both the production index and new orders index returned to expansionary ground amid moderate growth, and demand improved more markedly, with new orders setting an eight-month high.

Overseas demand remained weak due to the pandemic and transport disruptions, while new exports stayed in negative territory for a seventh month in a row, though the decline was less than in the previous month.

Despite the market bouncing back, companies were more cautious in hiring, and the employment index contracted for a seventh straight month, with a narrowing drop.

The purchasing price index and the producer price index for manufacturers rose sharply in February, both reaching new highs since November. The Caixin survey also showed that price increases on the cost and charging sides were mainly due to high prices of some raw materials and rising transport costs.

Business people remain optimistic, as the manufacturing production and business expectation index rose to a new high in the last eight months and is above the long-term average, according to Caixin, which did not provide statistics for these sub gauges.

At the policy level, it is necessary to strengthen employment policies, enhance structural support for small- and medium-sized firms, and effectively ease the corporate tax burden and financing costs, Caixin’s Wang said.

At the same time, Wang said China should continue to secure supplies and stabilize the price of commodities, alleviate the pressure brought by rising costs on middle and downstream businesses, and maintain the stability of market entities.

Editor: Peter Thomas