China’s Manufacturing Slows Down in January
Manufacturing in China experienced a slowdown in January for the first time in four months as workers began leaving assembly lines to travel to their hometowns for the Lunar New Year holidays. The National Bureau of Statistics reported that the Purchasing Managers Index (PMI) dropped to 49.1 in January from 50.1 in the previous month, indicating a contraction in activity.
New orders and production also contracted during this period. The PMI for the non-manufacturing sector, covering construction and services, fell to 50.2 points from 52.2 in December.
According to Zhao Qinghe, a senior statistician at the bureau, the decline in factory activity was influenced by the upcoming holidays. With public holidays in China starting on Tuesday and lasting until February 4, millions of Chinese workers return home for a break with their families, affecting economic data early in the year.
In 2024, China’s economy grew at a 5% annual pace, meeting the government’s target due to strong exports and stimulus measures. Despite the slowdown in activity in January, Zichun Huang of Capital Economics believes that the government’s efforts will lead to a rebound in the coming months.
However, Huang also highlighted the challenges policymakers face in achieving sustained growth, noting the disappointing PMI data for both manufacturing and construction sectors. The uncertainty surrounding exports, particularly with threats of increased tariffs by U.S. President Donald Trump, adds to the economic challenges faced by China.
