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China’s factory activity in January unexpectedly contracted, in part due to a slow season ahead of the Lunar New year, reversing the growth seen in the previous three months and keeping alive calls for stronger fiscal support to boost the economy.
The official purchasing managers’ index for January came in at 49.1, data released by the National Bureau of Statistics yesterday showed, compared with Reuters poll estimates of 50.1.
PMI had stayed above the 50 mark that separates expansion from contraction for the past three months, coming in at 50.1 in December, 50.3 in November and 50.1 in October, according to the official data.
The manufacturing PMI in January tends to be softer, as migrant workers return to hometowns ahead of the Chinese New Year, which falls on January 29, said Hui Shan, chief China economist at Goldman Sachs.
The blue-chip CSI 300 reversed gains earlier in the day to trade slightly lower, following the data release.
Despite the softer manufacturing PMI, the overall demand outlook appears positive, said Bruce Pang, senior research fellow at the National Institution for Finance and Development, citing stronger readings in two price sub-indexes.
The indexes measuring price levels for purchasing and selling major raw materials improved in January — albeit still in contraction territory — Zhao Qinghe, senior statistician at the NBS said in a press release.
A gauge of companies’ production and operation activity outlook expanded to 55.3, Zhao added, showing that most manufacturers were increasingly confident about business expansion after the holidays. — Reuters.
Online Reporter