Link Securities | China’s official manufacturing PMI came in at 49.1 in January, below the consensus forecast of 50.1, which had also been the previous month’s reading. Recall that a reading above 50 points indicates expansion in activity relative to the previous month, while a reading below that level indicates contraction.
Thus, the reading reflected contraction, and is the lowest level since last August. Production fell into contraction after three consecutive months of expansion. The sub-index for new orders fell to its lowest reading in five months, with exports lagging once again. The National Bureau of Statistics (NBS) said the slowdown in activity was due to the Lunar New Year holiday and concentrated workers returning home. It noted that metal products, specialised equipment, the railway segment, shipbuilding and aerospace equipment were growth sectors, while food and beverages, textiles, and non-ferrous metal welding acted as drags.
In terms of price parameters, China recorded more moderate declines, particularly in input prices. Employment remained in contraction, unchanged from December, while finished goods inventories recorded further declines. Firms of all sizes saw lower levels of activity, with smaller companies contracting the most.
Meanwhile, China’s official non-manufacturing purchasing managers’ index, the non-manufacturing PMI, fell in January to 50.2, down from 52.2 in December and below the market’s expected reading of 52.0. The construction sector recorded a substantial slowdown, while the expansion of the services sector slowed.
Finally, China’s official composite purchasing managers’ index, the composite PMI, fell to 50.1 in January from 52.2 in the previous month.
