Manufacturing growth slowest in 5 months

2020-02-04 06:12:05 GMT2020-02-04 14:12:05(Beijing Time) 菲律宾申博在线代理开户登入

China’s manufacturing sector expanded at its slowest pace in five months in January, according to a private Caixin survey.

The Markit/Caixin Purchasing Managers' Index, which focus mostly on small and export-oriented businesses, eased to 51.1 in January, slightly down from 51.5 in December.

PMI readings above 50 indicate expansion, readings below that level signal contraction.

The Caixin PMI index is closely watched as an alternative to the official PMI released on Friday, which stood at 50.0 in January, down 0.2 percentage points from a month earlier.

The Markit/Caixin survey features more smaller firms, while the official PMI survey typically polls a large proportion of big businesses and state-owned enterprises.

“The Caixin PMI stood at 51.1 in January, which means the manufacturing sector expanded at the slowest pace since August, indicating a mild economic recovery”, Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, said.

Weighing on the headline PMI was a softer rise in new orders, and production growth also slowed. The gauge for new export orders fell into contractionary territory, ending three straight months of expansion, which showed limited improvement in foreign demand despite the trade deal signed in January between the United States and China.

Purchasing activity fell slightly in January, and input and output inventories all dipped slightly, which means some manufacturers did not replenish stocks amid limited demand.

Industrial production costs continued to rise, attributed to higher prices for raw materials. “Pressure from rising raw material costs is worth attention,” Zhong said..

In order to reduce costs, firms shed jobs, which caused employment to fall for the first time in three months.

But business confidence rose to a 22-month high, boosted by the US-China trade deal.

The survey likely did not reflect the early impact of the Wuhan epidemic which flared in late January, which could weigh heavily on economic growth in coming months.

Zhong cautioned: “In the near term, China’s economy will also be impacted by the new pneumonia epidemic and will need more government support.”

Lian Weiliang, deputy chairman of the National Development and Reform Commission said at a press briefing on Monday that "the impact is temporary and China is confident to  reduce the impact to its lowest level.”

He also emphasized that, compared with SARS in 2003, China has a strengthened capacity to respond to emergencies.

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