Manufacturing in China experienced a slowdown in January for the first time in four months, as many workers began to leave the production lines to head home for the Lunar New Year celebrations.
According to the National Bureau of Statistics, the purchasing managers’ index (PMI)—a key indicator based on a survey of factory managers—dipped to 49.1 in January from 50.1 in December. A PMI reading above 50 indicates growth, while a reading below that threshold signifies a decline in activity.
In addition to the overall manufacturing PMI, metrics regarding new orders and production also saw a reduction.
Furthermore, the non-manufacturing sector, which incorporates services and construction, saw its own PMI decrease, falling to 50.2 from 52.2 in the prior month.
The reduction in factory activity is partially attributed to the impending Lunar New Year holidays, noted Zhao Qinghe, a senior statistician at the bureau. This significant festival is marked by public holidays starting on Tuesday and extending until February 4th, when millions of workers travel back to their hometowns for family reunions. Such holiday activities often lead to fluctuations in economic data at the start of the year.
In 2024, China’s economy recorded a 5% annual growth rate, meeting the government’s targets largely due to robust exports and various stimulus measures.
Despite the slowdown observed this month, analysts believe there may be a rebound owing to governmental initiatives. Zichun Huang from Capital Economics expressed that while the disappointing PMI data highlights the complexities that policymakers confront in fostering a continuous recovery in economic growth, a rebound could still be on the horizon.
Additionally, Huang pointed out that the construction PMI also experienced a decline. She remarked, “This situation is disappointing and indicates that fiscal support might not be sufficient to counteract the larger pressures affecting construction activity.”
The future for exports remains precarious as well, especially in light of U.S. President Donald Trump’s threats to impose higher tariffs on Chinese imports.
