The official manufacturing purchasing managers index, or PMI, climbed to 50.1 in January, just above the 50 marker that separates growth from contraction, China’s National Bureau of Statistics said Tuesday.

That exceeded a consensus forecast of 49.5 and was far above December’s sobering 47, the lowest reading since the start of the pandemic.

Of 21 manufacturing areas surveyed, 18 showed upticks in January. Production and new orders were up most for pharmaceuticals; agricultural product processing; equipment manufacturing; and transportation, including the railway, ship and aerospace sectors, data from the statistics bureau showed.

Yet it was the services sector that surprised experts the most. The nonmanufacturing PMI — a measure of business sentiment in services and construction — hit 54.4 in January, up from 41.6 in December. This was markedly higher than the consensus forecast of 47.3.

The numbers show that economic expansion has re-emerged despite the mammoth COVID spread that swept over China in December and January, and there may be more room to grow, said analysts at the financial-services firm Nomura.

“Looking to February, we expect both the manufacturing and nonmanufacturing PMIs to rise further, as more people adapt to living with COVID,” they wrote in a report published Tuesday.

The new data come at a crucial time.

Chinese officials said this month that the economy grew at 3% in 2022, the slowest annual growth rate in nearly 40 years. Last week, consumers in China told MarketWatch they were eager to spend and travel after COVID restrictions were lifted in December. But they said they were still concerned about the wave of infections that is believed to have hit more than 80% of the country in the span of just two months.

Chinese media touted the strong numbers Tuesday, though the government kept its eye on potential downsides.

“We must keep in mind that there were still many manufacturing and service companies reporting insufficient market demand in January,” National Bureau of Statistics senior statistician Zhao Qinghe wrote in commentary accompanying the data.

“Insufficient market demand is still the primary problem facing the production and operation of enterprises,” he said.

A private gauge of China’s manufacturing and retail sectors, also released Tuesday, was in line with the official data, showing growth in the retail and service sectors. Manufacturing rose from December but was well below its rate in the same period last year, according to consultancy China Beige Book.

Unlike the government’s zero-COVID approach, the COVID disease “interferes with work more than shopping,” the firm said in its monthly Flash Data report.

The robust January has caused significant upward revisions to China’s 2023 economic-growth estimates.

The International Monetary Fund on Tuesday raised its economic forecast for China, saying the end of COVID policies should boost the country’s GDP growth to 5.2% this year, significantly higher than the previously projected 4.4%.

But that spurt will be fleeting, falling to 4.5% in 2024, “before settling at below 4% over the medium term amid declining business dynamism and slow progress on structural reforms,” the IMF said.

Meanwhile, Chinese stocks are pushing into bullish territory. The large-cap CSI 300 Index
000300,
-1.06%
rose Monday and has now gained 20% over the last three months. Hong Kong’s Hang Seng Index
HSI,
-1.03%
hit an 11-year high.

Goldman Sachs
GS,
+0.19%
lifted its China stock targets for the third time in two months, raising its year-end target for the MSCI China Index to 85, from a previous 80, implying a 13% upside from existing trading levels. Its projections for the CSI 300 were even more aggressive, with a new 15% upside.

“The ‘China reopening trade’ is better characterized as a ‘China growth recovery, ’ ” Goldman analysts said in their report. “The current market rally is not just a consumer and services recovery trade, but a more broad-based growth rebound spanning a wide range of industries.”