The Official NBS Manufacturing PMI in China fell to 49.2 in February 2019 from 49.5 in January and missing market expectations of 49.5. The latest reading pointed to the third straight month of contraction in the manufacturing sector and the steepest since February 2016, amid a series of Lunar New Year holidays. Output shrank for the first time since January 2009, during the depths of the global crisis (49.5 vs 50.9 in December). Also, export sales fell for the ninth straight month, and at a faster rate, with the sub-index being at its lowest since February 2009 (45.2 vs 46.9); and employment fell further (47.5 vs 47.8). Meantime, new orders grew for the first time since November 2018 (50.6 vs 49.6). On the price front, input prices rose sharply, which was the first increase in three months (51.9 vs 46.3); while output charges went up noticeably (48.5 vs 44.5). Finally, business sentiment strengthened to its highest in four months (56.2 vs 52.5). Business Confidence in China averaged 51.89 Index Points from 2005 until 2019, reaching an all time high of 59.20 Index Points in April of 2008 and a record low of 38.80 Index Points in November of 2008.
Business Confidence in China is expected to be 51.60 Index Points by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Business Confidence in China to stand at 50.90 in 12 months time. In the long-term, the China NBS Manufacturing PMI is projected to trend around 51.00 Index Points in 2020, according to our econometric models.