(Yicai Global) March 1 -- Factory activity in China reversed contraction for the first time since August 2022 last month and jumped to the highest level since last July as rebounding demand gave rise to improving expectations.

The Caixin manufacturing purchasing managers’ index surged by 2.4 points to 51.6 in February from January, according to figures the financial media group released today. A level below 50 indicates contraction.

The PMI is in line with the corresponding indicator released by the National Bureau of Statistics. The official manufacturing PMI rose 2.5 points to 52.6, remaining in expansion territory for two consecutive months. The private Caixin index surveys smaller, private firms, while the NBS monitors larger, state-owned companies.

The data show the economy entered recovery in the post-pandemic era, according to Wang Zhe, senior economist at Caixin's think tank. However, the foundation is not yet solid as it will take time for production and lifestyles to get back to normal. In the coming period, policies should focus more on increasing household income and improving market expectations, Wang added.

Caixin sub-indexes prove production and export demand are getting better. The sub-index for production ended a five-month period of shrinking and that for new orders finished a six-month lull. The gauge for new export orders rose above 50 for the first time in nearly seven months.

Manufacturing companies are hiring again. After 10 months of contraction, the sub-index for employment climbed to positive territory in February, reaching a new high since July 2021, as companies respond to the improving product demand and prepare for further industry revitalization.

The supply chain is showing signs of full recovery after the Covid-19 pandemic. The supply time index edged up above 50 for the first time in nearly eight months, hitting the highest level since March 2015.

Moreover, market confidence continued to improve. The manufacturing expectations sub-index surged to the highest since April 2021, exceeding a long-term average. Enterprises expect production to widen in the coming months as pandemic controls ease, governments continue offering policy support, and new products are launched.

Editor: Emmi Laine, Xiao Yi