China factory activity edges down in January

BEIJING

Factory activity in China edged down in January, official figures showed yesterday.

The Purchasing Managers’ Index - a key gauge of manufacturing activity - in the world’s second-largest economy inched down to 50.1, just above the 50-point mark separating growth from contraction.

The data from the National Bureau of Statistics (NBS) shows a slight decrease from last month’s reading of 50.3, when activity was buoyed by an easing of commodity prices.

“Faced with a complex and severe economic environment and scattered outbreaks ... China’s economy continued to recover and develop, though growth levels somewhat declined,” said NBS statistician Zhao Qinghe.

The NBS reading contrasted with a private survey of smaller manufacturers, which fell by 1.8 points to 49.1.

“The slowdown is particularly severe for the small firms,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

The NBS figures have hovered in growth territory since November, following a seven-month downward trend in part due to power shortages and high raw material prices.

The reading fell below 50 for two months in September and October as the power crunch hit business operations.

New orders, which are measured in a sub-index, also fell, dropping to 49.3, according to the official measure.

New export orders activity also continued to contract, although at a slightly slower pace in January.

Meanwhile, the non-manufacturing business activity index was 51.1 in January, a contraction of 1.6 points from the previous month.

The decline was due in part to a slowing recovery in the services sector and a seasonal slowdown in
construction.

The Chinese economy was expected to show an expansion of 7.9 percent in 2021, but then slow down to 4.8 percent in 2022, according to the IMF.

China’s recovery is well advanced but it lacks balance and momentum has slowed, the IMF said in a report released on Jan. 28.