China’s factories are expanding, while Japan’s are contracting.

Following the pandemic, manufacturers in Asia’s two largest economies performed very differently.

According to official data, factory activity in China increased at the fastest rate in more than a decade last month.

However, manufacturing activity in Japan fell at the fastest rate in over two years in February.

Firms all over the world are weighing the benefits of reopening as Covid restrictions ease against rising costs of everything from energy to workers’ wages.

According to China’s National Bureau of Statistics, the manufacturing purchasing managers’ index (PMI) increased to 52.6 from 50.1 in January. The monthly reading was the highest since April 2012.

PMIs are economic trend indicators that provide important information to businesses, central banks, governments, and investors about current and future business conditions.

The PMI is represented as a number ranging from 0 to 100. A reading above 50 indicates an increase in activity over the previous month. A value less than 50 indicates contraction. The greater the deviation from 50, the greater the amount of change.

China’s much better-than-expected performance came after the world’s second largest economy’s strict coronavirus measures were eased late last year.

Due to widespread lockdowns and Covid-19 outbreaks, the country experienced one of its worst years in nearly a half-century in 2022.

Meanwhile, in Japan, the private manufacturing PMI fell to 47.7 in February from 48.9 in January, the fastest decline since September 2020.

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