China manufacturing contracts for a 4th straight month in January

China manufacturing contracts for a 4th straight month in January

A survey of factory managers in China released this month hows manufacturing contracted in January for a fourth straight month, reflecting weak demand and a faltering recovery in the world’s second-largest economy.

The official purchasing managers index, or PMI, rose slightly to 49.2 in January from 49.0 the month before.

The PMI is on a scale up to 100 where 50 marks the cutoff between expansion and contraction.

The manufacturing PMI has fallen in nine of the past ten months, rising only in September.

“Overall, the PMI data show that China’s economy remains relatively soft, as confidence remains weak,” Lynn Song of ING Economics said in a report. “Until forward-looking indicators such as new orders return to expansion, economic momentum is likely to remain tepid.”

Despite unexpectedly prolonged weakness after the pandemic, the economy grew at a 5.2 per cent annual pace last year, though that also was influenced by slow growth in 2022 during the worst of the COVID-19 pandemic.

In recent months, Chinese policymakers have introduced measures to shore up the economy, including spending more on construction of infrastructure, cutting interest rates and easing curbs on home-buying.

Last week, the central bank cut its reserve ratio requirement for banks, allowing banks to increase the amount of capital they can lend.

Beijing is also looking to expand some loans to real estate developers amid an ongoing property crisis, as developers struggle with a cash crunch.

Source: Economic Times