March 4, 2026 (InvestinChina.asia) — China’s manufacturing sector contracted marginally in February, as a longer-than-usual Lunar New Year holiday impacted production, according to official data released Tuesday. The non-manufacturing sector, however, saw a slight improvement, buoyed by a holiday-driven rebound in consumer services.
Key Data Points
- The official Manufacturing Purchasing Managers’ Index (PMI) came in at 49.0 in February, down 0.3 points from January, falling below the 50-point mark that separates expansion from contraction.
- The Non-Manufacturing PMI, which encompasses services and construction, edged up 0.1 points to 49.5, marking a slight improvement but remaining in contractionary territory.
- The Composite PMI Output Index, a weighted average of both sectors, declined 0.3 points to 49.5, indicating a broad, if mild, slowdown in overall business activity.
Huoli Hui, a senior statistician at the National Bureau of Statistics (NBS), attributed the softness in the headline manufacturing figure partly to seasonal factors. “The PMI for the month containing the Spring Festival typically sees some fluctuation. Especially this year, as the holiday period was longer and fell entirely in the second and third weeks of February, corporate production and business activities were somewhat impacted,” Hui stated.
Manufacturing: Broad-Based Softness with a Silver Lining
The February manufacturing PMI reflected a cooldown in both supply and demand. The sub-index for production fell 1.0 points to 49.6, while the new orders index dropped 0.6 points to 48.6. The weakness was not universal, however. The PMI for high-tech manufacturing held firm at 51.5, outperforming the overall sector and signaling sustained momentum. The consumer goods industry also saw its PMI recover slightly.
A stark divergence was visible among firms of different sizes. Large enterprises, with potentially greater operational resilience, saw their PMI rise 1.2 points to 51.5, staying in expansion. In contrast, medium and small enterprises, more vulnerable to holiday disruptions, experienced sharper declines, with their PMIs falling to 47.5 and 44.8, respectively.
Despite the monthly dip, business confidence in the manufacturing sector improved. The production and business activity expectation sub-index rose 0.6 points to 53.2, suggesting firms are optimistic about a post-holiday recovery.
Non-Manufacturing: A Tale of Two Sectors
The marginal gain in the Non-Manufacturing PMI masked diverging trends between services and construction.
Services benefited directly from holiday-related consumption. The services business activity index rose 0.2 points to 49.7. Sectors like accommodation, catering, and culture, sports, and entertainment were in “high boom” territory, with indices above 60.0. In contrast, capital market services and real estate remained in contraction. Service sector firms expressed sustained optimism, with the business expectation index holding at a robust 55.8.
Construction, however, faced a setback. Its business activity index fell 0.6 points to 48.2, as projects paused and workers traveled home for the holidays. The silver lining for the sector was a rebound in future expectations, with its business outlook index rising 1.1 points to 50.9, returning to expansionary ground.
Outlook
The data paints a picture of an economy experiencing predictable seasonal softness, with the extended holiday period acting as a significant dampener on short-term activity, particularly for smaller manufacturers and the construction sector. The resilience in high-tech manufacturing and the surge in holiday-driven services spending provide pockets of strength. Market watchers will be closely monitoring the March data to gauge the strength and breadth of the expected post-holiday rebound.
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