Factory activity in China picked up in February, official data showed Tuesday, as market demand and production resumed following the Lunar New Year holiday.

The Purchasing Managers' Index (PMI) -- a key gauge of manufacturing activity -- edged up in February to 50.2, defying expectations of a return to contraction territory, data from the National Bureau of Statistics (NBS) showed.

The 50-point mark separates growth from contraction.

"Enterprises resumed work and production in good shape after the holiday," NBS senior statistician Zhao Qinghe said in a statement.

He added that new orders in the world's second-biggest economy picked up, indicating that market demand returned after the holiday break.

The purchasing price index for key raw materials and the ex-factory price index both increased as well, rising "markedly for two consecutive months", Zhao said.

He noted that costs for petrol, coal and other materials continued to be in a "high range".

"Early indicators suggest that conditions improved in February," Julian Evans-Pritchard, senior China economist at Capital Economics, added in a recent report.

"Most localised restrictions on industrial areas and port cities were lifted thanks to fewer [coronavirus] outbreaks this month compared to January."

Pinpoint Asset Management chief economist Zhiwei Zhang added: "These encouraging signs likely reflect the effect of supportive macro policies."

China logged a spike in domestic coronavirus cases in late December and January ahead of the Winter Olympics in Beijing, with authorities scrambling to eradicate flare-ups in several major cities and restrictions such as lockdowns imposed.

Case numbers moderated after that, and non-manufacturing PMI picked up from 51.1 in January to 51.6 in February, NBS data showed.

In particular, activity in the construction sector accelerated.

The service industry's performance, however, still lags behind that of similar periods in earlier years, Zhao said.

"Virus cases dropped back in late January and were relatively low throughout the holiday, but consumers were still very cautious," Evans-Pritchard said.

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