China: Manufacturing conditions deteriorate sharply at the outset of the year
February 1, 2016
The Purchasing Managers’ Index (PMI) in January fell from the previous month’s 49.7% to 49.4%, according to the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP), which publish the index. The print undershot the 49.6% that market analysts had expected and represented the lowest reading since August 2012. As a result, the PMI is sitting further below the 50%-threshold that separates contraction from expansion in the manufacturing sector.
January’s reading reflected a broad-based deterioration as all but one of the main components of the index lost ground compared to the previous month. Both new orders and inventories dipped to an over three-year low in January, while the all-important production gauge, despite remaining entrenched in positive territory, fell to an 11-month low. On the other hand, employment improved marginally in the same month. Although input prices—a reliable leading indicator for consumer prices—jumped to a four-month high in January, it remained deeply mired in contractionary territory. New export orders receded mildly in January, highlighting weak global demand.