China’s economy appears to be emerging from the early faltering of reopening, with manufacturing, construction and export orders rebounding sharply in February, a sign the world’s largest crude oil importer could soon see a pick-up in oil demand.
China’s manufacturing purchasing managers’ index (PMI) rose to 52.6 in February from 50.1 in January, data from the China Bureau of Statistics showed on Wednesday. The increase in factory activity was the fastest in over a decade – the highest since April 2012.
The index for non-manufacturing sectors, including construction and services, also jumped, suggesting an overall expansion in China’s economy in February and possibly a faster-than-expected recovery after the reopening of the “zero Covid” policy, which the country gave up late last year.
The Caixin China General Manufacturing PMI, compiled by S&P Global, also showed a rebound in February, signaling a return to more normal business conditions. That, in turn, pushed business confidence among Chinese manufacturers to a 23-month high, S&P Global said.
Analysts warn that the big monthly rise in China’s manufacturing and non-manufacturing indicators could be the result of a low base for comparison in January and pent-up demand after the reopening. Still, some economists say the return to normal conditions could come sooner than expected.
Last month, the International Energy Agency (IEA) said global oil demand is expected to increase by 2 million barrels per day (bpd) this year, spurred by growth in Chinese consumption after reopening.
In its closely-watched oil market report, the IEA raised its estimate for global oil demand growth in 2023 by 100,000 bpd from the previous month’s forecast. China’s renewed oil demand – growing by 900,000 bpd this year – and the rest of the Asia-Pacific region will dominate global growth, according to the IEA.
“China accounts for nearly half of the projected 2 mb/d increase this year, with neighboring countries also set to benefit after Beijing abandoned its zero-Covid policy,” the IEA said.
By Tsvetana Paraskova for Oilprice.com
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