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China PMI January 2019

China: Manufacturing sector contracts again in January

The manufacturing purchasing managers’ index (PMI) published by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP) inched up from 49.4% in December to 49.5% in January. Although the print overshot the 49.3% expected by market analysts, this represents the second consecutive month in which the index lies below the 50.0% threshold that separates expansion from contraction in the manufacturing sector.

January’s reading reflected a slight increase in output, while new orders dipped to an over two-year low. Although export orders—a proxy for global demand—improved in January, it remained below the 50.0%-mark for the eight-consecutive month. Subdued manufacturing books prompted job creation to decline in January. Inventories of raw materials improved in January, whereas the supplier delivery time sub-index declined slightly. Input prices—a reliable leading indicator for inflation—partially recovered from the large decline in December when a fall in oil prices dragged on the sub-index.

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