China's factory gauge strengthens as producer prices rebound

[BEIJING] China's official factory gauge firmed in February as producer prices rebounded, giving top officials gathering in Beijing a solid economic backdrop as they seek to rein in financial risk.

Manufacturing purchasing managers index was 51.6 in February, compared with a median estimate of 51.2 in a Bloomberg survey of economists and 51.3 in January.

Non-manufacturing PMI stood at 54.2 versus 54.6 in January.

Numbers higher than 50 indicate improving conditions.

The National People's Congress starts this weekend and will likely signal increasing tolerance for slower yet sturdier economic expansion as leaders unveil their growth target for this year. Policy makers have pledged prudent monetary policy as they seek to manage the risk from swelling debt that followed earlier rounds of stimulus.

ECONOMIST TAKEAWAYS

"There's certainly an upside risk to growth," said Raymond Yeung, chief greater China economist at Australia & New Zealand Banking Group in Hong Kong. "A strong infrastructure pipeline and better-than-expected exports bode well for the near-term economic outlook. There's a reason for the central bank to shift its monetary policy stance."

BLOOMBERG