(Yicai Global) Feb. 15 -- The Small and Medium Enterprise Development Index posted the largest monthly gain in two years in January, ending a decline since early 2022, to recover to 88.9 points, data from the China Association of Small and Medium Enterprises showed today.

The SMEDI for eastern and central areas rose the most last month, indicating a quicker recovery for small and mid-size companies and the economy in these areas.

All eight sectors surveyed notched up month-on-month gains. Accommodation and catering rose the most, up by 1.8 point from December, followed by transportation and logistics with a 1.7 point increase. All eight sub-indexes also saw a monthly gain, with the input index rising for the second straight month.

Tight liquidity has eased and the performance situation has improved to some extent among domestic SMEs as the pandemic has moderated and macro policies have supported recovery, the association said. Each of the eight sectors recorded higher indexes for performance, domestic orders and sales volume than December.

Confidence has also begun to recover among SMEs, along with a greater willingness to invest. Seven sectors reported a higher fixed asset investment index from December.

But SMEs still face development issues such as rising costs and difficulty in hiring workers.

Production and operating costs have continued to increase among SMEs due to a rise in energy and raw material prices as well as labor costs. The cost index remained gloomy, as it increased 0.5 point from December to 113.3 last month.

In the labor market, supply has fallen and demand has risen. The labor supply index dipped 0.3 points to 112.9 last month, with the demand index up 1.5 point to 98.6.

Overall, economic operation is seeing a relatively solid recovery at present, the association said, adding that the SMEs' operating situation is set to continue improving thanks to the extension of various favorable policies.

Editors: Shi Yi, Tom Litting