Factory activity at 6-month low in January
Print Edition
CHINA’s purchasing managers’ index for the manufacturing sector dropped to a six-month low of 50.5 percent in January, according to official data released at the weekend.
Last month continued December’s decline and indicated the lowest factory activity since August while marking the 16th straight month above the boom-bust line, said a statement jointly released by the National Bureau of Statistics and the China Federation of Logistics and Purchasing.
In January, the sub-index for production stood at 53.0 percent, down 0.9 percentage points from December but still 0.2 percent higher than last year’s average.
The sub-index for new orders lost 1.1 percentage points to 50.9 percent, said the statement.
The sub-index for purchase quantity fell 1.7 percentage points to 51 percent in January, while the sub-index for new export orders stood at 49.3 percent, down 0.5 percent from December.
A PMI reading below 50 indicates contraction, while one above 50 signals expansion.
Major PMI indexes all declined in January, indicating downward pressure on the economy, but in general, the country’s economy is still expecting stable growth, said Zhang Liqun, an analyst with the Development Research Center of the State Council.
Falling new orders showed the growing impact of market demand restraints and enterprise competition and restructuring are expected in the future, Zhang said.
The HSBC/Markit China manufacturing PMI for January dipped to 49.5 from 50.5 in December, the first deterioration of operating conditions in the manufacturing sector since July.
Qu Hongbin, chief China economist with HSBC, described the dynamic as “a soft start to China’s manufacturing sector in 2014, partly due to weaker new export orders and slower domestic business activities during January.”
Factory activities in January were mainly dragged down by overcapacity easing and a cut in production ahead of the Chinese New Year, said Zhao Qinghe, a senior analyst with NBS.
Zhao expects an improving business environment for manufacturers and more robust play of market forces as China continues to push new reforms to restructure its economy.
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