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The
National Bureau of Statistics said its purchasing managers
index, based on a survey of factory managers, slipped to 49.1 in
January from 50.1 the month before. A PMI reading above 50
indicates expansion. Under 50 signals a contraction in activity.
New orders and production also contracted.
A parallel purchasing managers’ index for the non-manufacturing
sector, which covers construction and services, fell to 50.2
points from 52.2 in December.
The slide in factory activity was partly due to the approach of
the holidays, said Zhao Qinghe, a bureau senior statistician.
China's most important festival, this year public holidays will
begin Tuesday and continue until Feb. 4. Millions of Chinese
leave the cities to travel back home for a rare break with
family during the holidays, which tend to distort economic data
early in the year.
China’s economy grew at a 5% annual pace in 2024, hitting the
government’s target thanks to strong exports and stimulus
measures.
While activity slowed this month, it's likely to pick up again
thanks to the government's efforts, Zichun Huang of Capital
Economics said in a commentary.
“But the disappointing PMI data underscores the difficulty
policymakers face in achieving a sustained recovery in growth,"
she said.
She noted that the PMI for construction also fell.
“This is disappointing, and suggests that fiscal support may be
struggling to offset the broader pressures weighing on
construction activity,” Huang said.
The outlook for exports also remains uncertain, given threats by
U.S. President Donald Trump to raise tariffs on imports from
China.
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