China PMI


China: Manufacturers defy global slowdown at the outset of 2012

February 1, 2012

The Purchasing Managers' Index (PMI) published by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFPL) inched up from 50.3 points in December to 50.5 points in January, overshooting market expectations that had the PMI falling below the 50-point threshold that separates expansion from contraction. The soft increase observed in January was broad-based, as 3 out of the 5 sub-categories used to calculate the overall index recorded gains over the previous month. New orders, which account for 30% of total PMI, rose to 50.4 points, while production output, which accounts for a quarter of the total PMI, grew to 53.6 points. On the other hand, export orders dropped to 46.9, thus remaining in contraction mode for the fourth month in a row. Moreover, the input prices category, which is a reliable leading indicator of consumer prices, rose to 50 points, marking its highest level in four months. That said, despite the improvement, a majority of components remained below the 50-point threshold The positive January reading suggests that manufacturing remains relatively strong, despite slowing global demand. However, analysts warn that data may have been distorted due to the week-long Chinese New Year holiday.


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