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China PMI January 2022

China: Manufacturing PMI falls to 10-month low in January

The National Bureau of Statistics’ Manufacturing Purchasing Managers’ Index (PMI) came in at 50.1 in January, down from December’s 50.3. As such, the index remained above the 50-threshold, pointing to a continued, albeit moderating, improvement in business conditions from the previous month.

The fall came on the back of a faster deterioration in new orders. In addition, purchasing activity and production growth grew at a slower rate. Delivery times lengthened at a faster rate, while both input and output price pressures intensified amid a notable recent increase in international commodity prices. Looking at size, the PMI of large manufacturing firms rose, while that of small- and medium-sized firms fell. Meanwhile, the National Bureau of Statistics’ non-Manufacturing PMI stood at 51.1 in January, down from December’s 52.7, on weaker readings from the construction and services sectors. The reading came amid Omicron flare-ups domestically.

Analysts at Nomura were downbeat regarding the near-term outlook:

“Looking to February, we expect the official manufacturing PMI to weaken to 49.8, as the economy continues to face reduced production capacity during the Winter Olympics and weaker demand as a result of the Covid-19 resurgence (especially in Beijing and Hangzhou), the property downturn and slowing export growth. The non-manufacturing PMI could also fall further to 50.5, as the strict social distancing measures are set to remain largely in place during the second half of the Lunar New Year travel rush and the Winter Olympics.”

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