Multiple economic indicators for February 2026 signal recovering demand, warming investment, and strengthened policy support, pointing to a robust beginning for the year. Key data releases show the Consumer Price Index (CPI) rose to 1.3% year-on-year from 0.2% previously. The Producer Price Index (PPI) saw a narrower decline, improving to -0.9% from -1.4%. The manufacturing Purchasing Managers' Index (PMI) fell by 0.3 percentage points from the previous month to 49.0%. Fixed-asset investment grew 1.8% year-on-year, reversing the negative growth trend seen at the end of the previous year. New yuan-denominated loans reached 900 billion yuan, while the M2 money supply growth rate remained steady at 9.0%.
The CPI increase was primarily driven by the timing of the Lunar New Year holiday, which created a low base effect from the previous year. Analysts note that while consumer price growth is gradually recovering, it remains relatively subdued, reflecting continued softness in consumer demand. Looking ahead, inflation is expected to rise moderately, influenced by ample domestic supply and potential imported inflationary pressures from rising global energy prices.
The improvement in PPI was supported by price increases in key industrial inputs such as crude oil and non-ferrous metals. As seasonal holiday factors fade, price trends are likely to stabilize. However, geopolitical tensions contributing to higher international oil prices near $120 per barrel may elevate global inflation expectations and increase imported inflation pressure.
The decline in the manufacturing PMI was attributed to the extended and later timing of the Lunar New Year holiday, which slowed factory activity and delayed post-holiday resumptions. As work resumes and domestic demand-stimulating policies take effect, the PMI is anticipated to recover, with attention focused on marginal improvements in domestic consumption.
The turnaround in fixed-asset investment growth was bolstered by infrastructure spending, supported by accelerated fiscal fund allocations and an increased share of special bond issuance directed toward infrastructure projects. This shift reflects stronger fiscal support aimed at stabilizing economic growth at the start of the year.
Household loans remained weak in February, with short-term and medium-to-long-term loans both declining. The data suggests continued caution among consumers, particularly in the housing market, where transaction volumes in major cities have been declining since October of the previous year.
M2 growth held steady at a high level, largely due to a significant increase in fiscal expenditure, which offset the impact of slower non-bank deposit growth. The elevated M2 growth rate also reflects the conversion of earlier government bond financing into corporate and household deposits through fiscal channels.