China’s factory activity expands in January as export orders rise, business confidence hits 9-month high
- China’s Caixin/S&P Global manufacturing purchasing managers’ index (PMI) remained unchanged at 50.8 in January
- The positive result contrasted with an official survey showing manufacturing activity contracted again last month due to persistently weak demand
China’s factory activity expanded in January thanks to stable growth in output, quicker logistics and the first rise in new export orders since June, helping lift business confidence to a nine-month high, a private-sector survey showed on Thursday.
Taken together, they point to a still-underperforming economy in need of more policy support.
“Quicker logistics, increased procurement, and rising inventories reflected improved business confidence,” said Wang Zhe, senior economist at Caixin Insight Group.
However, he noted that employment remained in contraction, price levels were subdued and “deflationary pressures persisted”.
Policymakers in China face a daunting task as they try to revitalise the economy in the face of a property downturn, local government debt risks, deflationary pressures and tepid overseas demand.
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Lunar New Year rush under way in China with more travel overseas and to major domestic cities
But the Caixin survey offered some hope that external demand may be starting to improve with new export orders increasing for the first time since June last year, though marginally.
Moreover, forecasts of stronger global demand, planned investment, new product releases and efforts to expand into new markets drove manufactures’ confidence to their highest since April last year.
But factories continued to trim their workforce in January, while efforts to attract and secure new orders prompted them to cut product selling prices.
