China manufacturing stabilizes; economists say it won't last

Manufacturing activity in China contracted in February, but only marginally, according to data released Wednesday by the China Federation of Logistics & Purchasing (CFLP). The Purchasing Managers’ Index (PMI) rose to 49.0 in February, up from 45.3 the previous month, the Wall Street Journal reported. The results tally with another version of the PMI released earlier this week by brokerage CLSA, which increased to 45.1 in February from 42.2 in January. Both measures remain below 50, indicating a contraction, but the slower pace of contraction suggests that manufacturing is beginning to stabilize. The CFLP and CLSA PMIs have been below 50 for five and seven months respectively. Both touched record lows in November. Economists warn that the improvement may be temporary as domestic and external demand remains weak. It is suggested that the increase in activity was driven by companies restocking supplies – after cutting inventory late last year – rather than a recovery in consumer demand.