Wednesday, February 1, 2017

China’s manufacturing PMI exhibits modest gains for January

China’s economy under the manufacturing sector has showed promising modest growth for the month of January, continuing with its sixth-month streak. On the country’s official Purchasing Managers’ Index (PMI), the manufacturing sector grew at 51.3 for the latest month, down a bit from December’s 51.4 data, but still above analysts’ forecast growth of 51.2. The data was published by the National Bureau of Statistics (NBS).


Despite the slight decline, the data for the month still exceeds level 50 on the PMI and continues with its monthly growth. The PMI above 50 indicates a positive growth, while a reading below this level shows a contraction in the sector.

“The PMI dipped slightly for manufacturing, which could be an early indication that manufacturing is starting to lose momentum as the real-estate market goes down. We expect further deterioration this year, although the fall off should be quite gradual,” said analyst Amy Yuan Zhuang.

Although January was the second straight month the country’s index declined, its PMI still remained above level 50 for the sixth month now.

According to the NBS, the growth was slower among bigger manufacturing firms, with the PMI declining to 52.7, or 0.5 points below the December data. For the smaller firms, PMI dropped 0.8 point to 46.4, while for the medium-sized manufacturers, PMI rose by 1.2 points at 50.8 level. This indicates that only the medium-sized companies in the sector showed improvement over the month.

Under the non-manufacturing PMI, the country was at 54.6 for January versus the 54.5 last December, up by 0.1 points.

NBS stated that the other sectors also were able to remain in the 55 PMI level. The construction sector remained above 60 for the fifth straight month, registering at 61.1 for the month of January.


However, economists suggest not to fully rely on January’s data output, since the country is currently celebrating the Lunar New Year holiday, which tends to tilt production in the nation when factories closed days ahead of the celebration day.

Meanwhile, the International Monetary Fund has adjusted China’s economic growth forecast for 2017 last month from 6.2% to 6.5%. Still, it cautioned regarding the increasing corporate debt, which recently increased the medium-term risk of a sharp slowdown.

“On debt, the situation is not improving and may have worsened. And while overcapacity has been reduced in the most severe sectors like steel and coal, there’s still overcapacity,” Zhuang added.



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