Explainer | Is China in a renewed recovery? 4 takeaways from January’s manufacturing, services data

Official manufacturing purchasing managers’ index (PMI) remained in contraction in January, while the Caixin/S&P Global gauge for factory activity beat expectations

Official non-manufacturing PMI continued to improve in January, while the Caixin/S&P Global gauge edged down slightly

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China’s official non-manufacturing purchasing managers’ index (PMI) – an indicator of services activity – continued to improve in January, climbing to 50.7 from 50.4 in December. Photo: AP

Published: 12:00am, 6 Feb 2024Updated: 12:28am, 6 Feb 2024

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1. On paper, factory activity held steady last month

China’s official manufacturing purchasing managers’ index (PMI) stood at 49.2 in January, compared with a reading of 49 in December.

Within the manufacturing PMI, January’s new export orders subindex increased to suggest internal and external demand had improved.

The production subindex also improved from the previous month, indicating that sentiment in the manufacturing sector had improved.

An increase was also seen in the new orders subindex, indicating demand for the manufacturing sector had improved slightly.

“January’s modest rebound in the official manufacturing PMI was mostly driven by a production improvement,” said analysts at Nomura.

“Overall, two of the five subindices that directly feed into the headline manufacturing PMI calculations contributed to the sequential uptick in January, and three subindices remained drags on the headline index, suggesting the ongoing economic dip in the sector remain well in place in January.”