China's manufacturing sector experienced a contraction in January for the first time in four months, signaling a potential slowdown in the country's economic recovery. The Purchasing Managers' Index (PMI) dropped below the 50-point threshold, indicating a contraction.
Beijing — China's manufacturing activity contracted in January for the first time in four months, according to official data released Monday, as the Chinese government struggles to sustain the recovery in the world's second-largest economy. Policymakers have been grappling with reversing a post-pandemic slump driven by a crisis in the property sector, weak consumer spending, and high government debt. The Purchasing Managers' Index ( PMI ) — a key indicator of industrial output — stood at 49.
1 in January, as reported by the National Bureau of Statistics (NBS), falling below the 50-point threshold that distinguishes growth from contraction. This figure represents a decline from December's reading of 50.1, which marked the third consecutive month of positive territory following a six-month downturn that ended in October. The NBS statistician Zhao Qinghe attributed January's contraction to 'the approaching Lunar New Year holiday and the concentrated return of business employees to their hometowns.' Zhao explained that both production and demand weakened in the lead-up to the eight-day public holiday, spanning from January 28th to February 4th. Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, noted in a commentary, 'Economic momentum unexpectedly slowed in both manufacturing and service sectors ahead of the Chinese New Year.' Zhang further suggested that part of the slowdown could be attributed to weaker external demand, as the new export orders index plummeted to its lowest level since March of the previous year.In recent months, Beijing has implemented a series of aggressive measures aimed at stimulating growth, including interest rate reductions, the abolishment of restrictions on home purchases, and easing the debt burden on local governments. However, economists have cautioned that more direct fiscal stimulus targeted at bolstering domestic consumption is essential to fully revitalize the economy, which has yet to fully rebound since the Covid-19 pandemic
CHINA MANUFACTURING ECONOMY PMI GROWTH
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